USD/CAD’s upswing is hitting the ceiling around a key technical resistance area.
Will the pair maintain its range pattern? Or will we see a breakout?
USD/CAD: 4-hour
If you missed it, the U.S. dollar gained a few pips against its counterparts as traders eased up on their Fed rate cut speculations after Friday’s U.S. NFP report and ahead of this week’s FOMC meeting minutes and U.S. CPI and PPI releases.
Meanwhile, the Canadian dollar has lost a few pips to its safe-haven counterparts while traders worry about Middle East tensions and not-so-dovish Fed expectations. Remember that directional biases and volatility in market price are typically driven by fundamentals.
USD/CAD, which has been trading in an uptrend since late September, is popping up tall wicks around the 1.3650 level. Coincidentally, the psychological level lines up with resistance from back in September and the R1 (1.3618) Pivot Point line in the 4-hour time frame.
Can USD/CAD bears hold the fort at the range resistance area?
Watch out for more wicks and bearish candlesticks, which could draw in selling pressure and start a downswing that could take USD/CAD to its 1.3550 Pivot Point and mid-range levels.
If it turns out that USD/CAD is just taking a breather, then the pair could be in for more gains. Keep an eye out for new October highs and sustained trading above the 1.3650 area which opens up a possible move to the 1.3700 psychological handle or the 1.3750 previous area of interest.
Final Thoughts
The USD/CAD pair appears to be hitting a key resistance level of around 1.3650, and the formation of tall wicks around this psychological level suggests that selling pressure may intensify. Given that this resistance aligns with past September highs and the R1 Pivot Point on the 4-hour chart, it’s possible that bears could take control, triggering a downswing towards the 1.3550 level if further bearish candlesticks appear.
The market’s sensitivity to both fundamental factors, such as concerns over Middle East tensions and shifting expectations around U.S. Federal Reserve policy, adds another layer of uncertainty to the pair’s short-term trajectory.
However, the uptrend since late September suggests that USD/CAD may just be consolidating before a potential breakout. If the pair can sustain trading above the 1.3650 level, particularly with positive U.S. economic data and hawkish Fed sentiment, we might see the pair making new highs for October.
Ultimately, whether the pair will continue its range-bound behavior or break out depends on how these key fundamental and technical factors play out in the coming days, especially with the release of U.S. CPI and PPI reports.
Via BabyPips
