USD/CAD Price Analysis: Gathers strength for a breakout above 1.3850
- Ascending 20-and 50EMAs add to the upside filters.
- Negative market sentiment supports the greenback’s appeal.
- The RSI (14) is aiming to enter into the bullish range of 60.00-80.00.
The USD/CAD pair is oscillating around 1.3800 following the sideways performance in the US dollar index (DXY) after a firmer rebound from 112.50. The risk sentiment is dismal amid weaker S&P500 futures and is expected to support the safe-haven appeal further. Also, the 10-year US Treasury yields are aiming to recapture 4%.
On a four-hour scale, the major is auctioning in an inventory adjustment process, which indicates a tad longer consolidation period. It is critical to state that the adjustment process is a mark-up accumulation or distribution by institutional investors. Prior momentum has remained extremely bullish, therefore, odds are favoring a mark-up accumulation.
The 20-and 50-period Exponential Moving Averages (EMAs) at 1.3758 and 1.3705 respectively are aiming higher, which adds to the upside filters.
Also, the Relative Strength Index (RSI) (14) is aiming to shift into the bullish range of 60.00-80.00, which will trigger an upside momentum.
Should the asset break above Tuesday’s high at 1.3855, the greenback bulls will expose the asset to hit a fresh two-year high at 1.4000. A breach of the latter will drive the major towards May 2020 high at 1.4173.
On the contrary, a decisive break below the round-level support placed at 1.3600 will drag the asset towards the psychological support at 1.3500, followed by September 19 high at 1.3344.
USD/CAD four-hour chart
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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.
