USD/CAD Price Analysis: Extends recovery to near 1.3250
- USD/CAD rebounds to near 1.3250 after a consolidation breakout.
- The USD Index has climbed to near 101.35 while the broader bias is still downbeat.
- A mean-reversion move to near the 20-EMA is highly likely.
The USD/CAD pair climbs to near 1.3250 after delivering a decisive break of the consolidation formed in a range of 1.3180-1.3230 from Wednesday. The Loonie asset jumps as the US Dollar Index (DXY) has recovered further and the oil price has been hit due to resumption of commercial shipment from the Red Sea route.
The oil price has been corrected almost 6% from three-week high of $76.00 as oil supply will improve ahead. It is worth noting that Canada is the leading exporter of oil to the United States and lower oil prices impact the Canadian Dollar.
Meanwhile, the recovery in the USD Index has been extended to 101.35. Investors hope that market reaction to expectations of rate cuts by the Federal Reserve (Fed) from March 2024 is overwhelming than anticipated. In spite of a swift recovery attempt, the USD Index is expected to end 2023 with significant losses.
USD/CAD has been falling since the first day of November and is expected to decline further towards June 27 low, which is around 1.3117. However, a mean-reversion move to near the downward-sloping 20-day Exponential Moving Average (EMA) around 1.3377 is highly likely.
The Relative Strength Index (RSI) (14) hovers in the bearish range of 20.00-40.00, which indicates downside momentum is intact.
Going forward, a breakdown below December 28 low of 1.3180 would expose the asset to July 25 low near 1.3150, followed by July 13 low around 1.3193.
In an alternate scenario, a recovery move above April 14 low around 1.3300 would drive the asset towards December 21 high at 1.3370. A breach of the latter would push the Loonie asset towards May 16 low at 1.3404.
USD/CAD daily chart
-638394404995919558.png)
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
