In the aftermath of a tumultuous period, the USDCAD pair demonstrates a commendable recovery, bouncing back with vigor. The currency pair managed to pivot from its previous setbacks, posting a promising 0.20% gain on Thursday. This rally was catalyzed, in part, by a marginally positive US Consumer Price Index (CPI) report, which hinted at strengthening economic indicators. While the USDCAD consistently held its position above its simple moving averages (SMAs), it faced familiar challenges. The persistent descending trendline, originating from its 2020 zenith, reasserted its resistance.
This prevented the currency pair from breaching the 1.3700 mark, a key threshold that bulls are eyeing fervently. However, there's a silver lining for optimists: both the Relative Strength Index (RSI) and the stochastic oscillator are signaling potential bullish momentum. If these indicators hold true, and the 1.3700 barrier is surpassed, the pair might set its trajectory towards the notable 2023 resistance range of 1.3800-1.3860. On its journey upwards, the 2022 pinnacle at 1.3276 may serve as an intermediate milestone.
Conversely, there are essential support levels to monitor. The 20- and 50-day SMAs appear poised to keep the currency pair elevated above a short-term support trendline, which has been tracking since July, and is currently hovering near the 1.3500 mark.
It's noteworthy that the 200-day SMA is demonstrating a flattening trend around this same area. Should the pair take a downward turn, it may activate a bearish correction towards the support established in November, positioned at 1.3390. If the pair doesn't find its footing there, it could be funneled into the 1.3245-1.3290 range. This particular zone holds significance as it's where the upper boundary of the prevailing bearish channel intersects with the 2021's upward trendline. In synthesis, while the USDCAD's recent resurgence paints an optimistic picture, it is contingent upon its ability to sustain a position above 1.3700. Traders and investors alike should exercise prudence and closely monitor the pair's trajectory in the coming days.