USD/CAD may encounter preliminary support at the nine-day EMA of 1.4062. The 14-day Relative Strength Index stands at 56, suggesting a favourable momentum that is not yet in an overstretched territory. The immediate resistance is positioned near the upper boundary of the descending channel at 1.4140. USD/CAD continues to decline for the second consecutive day, currently trading near 1.4110 during European hours on Tuesday. The technical analysis of the daily chart indicates that the pair price is consistently confined within the descending channel pattern, suggesting a persistent bearish sentiment. The USD/CAD pair exhibits a mildly bullish near-term bias, with prices sustained above both the nine- and 50-period Exponential Moving Averages.
This positioning indicates that underlying demand continues to be present following the recent pullback from recent highs. The 14-day Relative Strength Index around 56 suggests a favourable yet not excessive momentum, while the FXS Fed Sentiment Index remaining elevated supports a positive environment for the US dollar in relation to the Canadian dollar. On the downside, the USD/CAD pair may decline toward initial support at the nine-day EMA of 1.4062, followed by the 50-day EMA of 1.4056. A breach beneath the moving averages would exert downward pressure on the pair, steering it toward the vicinity of the lower boundary of the descending channel near 1.3850, subsequently approaching the five-month low of 1.3732, established on May 21.
The USD/CAD pair may test the immediate barrier at the upper boundary of the descending channel around 1.4140. A break above the channel would support the pair in exploring the area around a nearly 18-month high of 1.4299, recorded on October 14. Rabobank’s RaboResearch team highlights that “a few Fed speakers crawled out of the woodwork yesterday to opine on the inflationary environment in the US,” including alternate voter Thomas Barkin of the Richmond Fed and non-voter Austan Goolsbee from Chicago. According to the bank, the rhetoric from both officials “broadly aligned with the now more hawkish lilt across the FOMC,” as they pointed to the “persistence of core CPI inflation, especially in services,” and underscored the “justification for future hikes.”
