USD/CAD Price Analysis: Tests triangle’s breakout region near 1.3500

The USD/CAD pair found support after a corrective move to near the psychological support of 1.3500 in the early New York session. The recovery in the Loonie asset is supported by a rebound in the US Dollar and a sharp decline in oil prices.

Earlier, the US Dollar Index (DXY) corrected to near 106.20 as the risk appetite of the market participants improved. While the broader bias in the US Dollar remains upbeat as the US economy is absorbing the consequences of higher interest rates by the Federal Reserve (Fed).

Going forward, the Canadian Dollar will dance to the tune of the monthly Gross Domestic Product (GDP) data for July, which will be published on Friday at 12:30 GMT. As per estimates, the Canadian economy grew by a nominal pace of 0.1%. In June, the GDP data contracted by 0.2%.

USD/CAD tests the breakout region of the Symmetrical Triangle chart pattern formed on a two-hour scale. A breakout of the aforementioned chart pattern results in wider ticks and heavy buying volume. The broader trend is still bearish as the asset is trading below the 200-day Exponential Moving Average (EMA), which trades around 1.3512.

The Relative Strength Index (RSI) (14) trades in the 40.00-60.00 range, which signifies consolidation.

A decisive break above September 21 high at 1.3524 would drive the asset towards September 11 low around 1.3560, followed by the round-level resistance at 1.3600.

In an alternate scenario, a breakdown below September 25 low around 1.3450 would drag the asset toward September 20 low near 1.3400. A further breakdown could expose the asset to six-week low near 1.3356.

USD/CAD two-hour chart