USD/CAD tests 1.3800 tricky area [Video]

• USDCAD marks positive week, but slows pace near 1.3800.

• Short-term bias skewed to the upside, but caution needed.

USDCAD has been in a bullish corrective mode during the week, retracing some of its losses from November’s one-year high of 1.3898.

Entering the 1.3800 area has been a struggle over the past two days, and there might be another tough obstacle within the 1.3840-1.3870 region, but the bulls may not give the battle yet, according to the technical indicators. Specifically, the RSI is still standing above its 50 neutral mark, despite losing some pace, and the stochastic oscillator has yet to confirm overbought conditions, both keeping the bias on the positive side for now.

In the event the pair re-activates its uptrend above November’s top of 1.3898, the next target will be the 2022 high of 1.3976 and the 1.4000 psychological mark. Even higher, the bulls might head for the 1.4100 number, which was a key resistance area during the first half of 2020.

On the downside, the 20-day exponential moving average (EMA) has been containing selling forces over the past two days. Hence, a step beneath that line at 1.3750 might produce fresh negative volatility, likely squeezing the price towards the 1.3680 trendline area. Another defeat there could add more fuel to the bearish wave, bringing the 1.3570 barrier immediately under the spotlight.

Overall, USDCAD is sustaining an upward trend above 1.3650-1.3670 in the four-month picture. To attract new buyers, the pair will need to pierce through the 1.3840-1.3860 bar.