USD/CAD Price Analysis: Loses resilience as US Dollar corrects
- USD/CAD corrects to near 1.3500, following the footprints of the US Dollar.
- Investors seem confident that the Fed will not raise interest rates further despite resilience in the US economy.
- USD/CAD trades in a Rising Channel pattern in which each pullback is considered buying opportunity.
The USD/CAD pair finds selling pressure to near 1.3552 after a three-day winning spell and corrects to near the psychological support of 1.3500. The Loonie asset faces pressure amid a correction in the US Dollar Index (DXY) as the risk-aversion theme starts fading.
S&P500 futures generate some gains in the European session as investors seem confident that the Federal Reserve (Fed) will not raise interest rates further despite resilience in the United States economy. As per the CME FedWatch Tool, more than 88% of chances are in favor of a steady interest rate decision for the September policy.
The USD Index extends correction to near 103.20 as the US Department of Labor reported a decline in individuals claiming jobless benefits for the first time to 239K vs. expectations of 240K and the former release of 250K for the week ending August 11.
USD/CAD trades in a Rising Channel chart pattern on an hourly scale in which each pullback is considered as buying opportunities by the market participants. The Loonie asset has corrected to near the immediate support plotted from August 8 high around 1.3500. Also, the upward-sloping 50-period Exponential Moving Average (EMA) at 1.3505 is providing support to the US Dollar bulls.
The Relative Strength Index (RSI) (14) seems edgy around 40.00. A breakdown below the same will activate the bearish impulse.
Going forward, a decisive break above the intraday high at 1.3552 will drive the major toward June high at 1.3585, followed by May high at 1.3650.
In an alternate scenario, a downside move below July 18 high at 1.3288 would drag the asset toward July 27 low around 1.3160 and July 14 low marginally below 1.3100.
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.
