• USDCAD bounces back after one-month low.

  • Focus remains on the upside, but price still in neutral zone.

  • Canadian CPI could fuel more volatility at 13:30 GMT.

Chart

USDCAD bulls did not surrender following the pre-inauguration dip to a one-month-low of 1.4259, staging a quick comeback during Tuesday's early trading hours and even forcefully charting a new four-year high of 1.4514.

Despite the volatility, though, the pair remains confined between the resistance area of 1.4465-1.4500 and the support area of 1.4330-1.4360. A decisive close either below or above this territory is needed to activate new trading orders. Given the latest rebound in the RSI and the Stochastic oscillator, the bullish scenario seems more likely at the moment. At this point, it's also worthy to note that the Bollinger bands have narrowed, flagging a directional move in the short-term. 

If the price were to pierce through the wall of 1.4465-1.4500, the door could open for the resistance trendline at 1.4585. Beyond that, the uptrend could reach the 2020 and 2016 highs registered near 1.4665 and even touch the 1.4700 psychological level. The next obstacle could pop up around 1.4800.

Should the bears squeeze the pair back below its protective 20-day exponential moving average (EMA) and the 1.4340-1.4360 base, the 50-day EMA at 1.4220 could provide a helping hand, preventing a freefall toward the 1.4100 number and the broken resistance line from April 2024. The 1.4000 zone could be the next stop on the downside.

In brief, USDCAD keeps defending its upward trajectory despite its recent turbulence. A clear break above 1.4465-1.4500 could deliver a new bullish wave. On the other hand, sellers might wait for a drop below 1.4330 to take control of the market. 

Forex trading and trading in other leveraged products involves a significant level of risk and is not suitable for all investors.

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