USD/CAD Price Analysis: Fakeout drags loonie below 1.3400

USD/CAD has slipped below the 20-period EMA amid risk-on mood and the higher oil price.
Fed Powell’s hawkish commentary failed to infuse blood into the safe-haven assets.
A Fakeout of the Falling Channel pattern has trimmed demand for the US Dollar.

Sagar Dua FXStreet

The USD/CAD pair has dropped vertically below the crucial support of 1.3400 in the early Tokyo session. The Loonie asset is facing immense pressure amid a decline in the US Dollar Index (DXY) and a sheer recovery in the oil price. The USD Index showed immense volatility despite Federal Reserve (Fed) chair Jerome Powell favors for a continuation of interest rate hikes after a stronger-than-expected January United States Nonfarm Payrolls (NFP) report.

Risk-perceived assets like S&P500 settled Tuesday’s session on a bullish note supported by tech-savvy stocks, portraying that the risk appetite theme is in traction. The alpha generated by 10-year US Treasury bonds has surged to near 3.68%.

USD/CAD sensed the presence of sheer selling pressure after an attempt of delivering a breakout of the Falling Channel chart pattern on a two-hour scale. The formation of a Fakeout pushed the asset below the 20-period Exponential Moving Average (EMA) around 1.3414, which indicates that the short-term trend is bearish.

The Relative Strength Index (RSI) (14) has shifted into the 40.00-60.00 range from the bullish range of 60.00-80.00, which indicates that the bullish view has been negated for now.

The bullish view for the US Dollar was negated after a failure in delivering a Falling Channel breakout, which has exposed the loonie for a downside till January 3 low at 1.3321 and February 2 low at 1.3262 as the asset has slipped below the round-level support of 1.3400.

In an alternative scenario, a break Above February 7 high at 1.3469 will drive the asset toward January 19 high at 1.3521 followed by January 6 low at 1.3538.

USD/CAD two-hour chart

USD/CAD

Overview
Today last price	1.34
Today Daily Change	-0.0043
Today Daily Change %	-0.32
Today daily open	1.3443

Trends
Daily SMA20	1.3383
Daily SMA50	1.3498
Daily SMA100	1.3536
Daily SMA200	1.3225

Levels
Previous Daily High	1.3476
Previous Daily Low	1.3397
Previous Weekly High	1.3472
Previous Weekly Low	1.3262
Previous Monthly High	1.3685
Previous Monthly Low	1.33
Daily Fibonacci 38.2%	1.3446
Daily Fibonacci 61.8%	1.3427
Daily Pivot Point S1	1.3401
Daily Pivot Point S2	1.3359
Daily Pivot Point S3	1.3322
Daily Pivot Point R1	1.348
Daily Pivot Point R2	1.3517
Daily Pivot Point R3	1.3559

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.

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