USDCAD pushes to attempt a break above 1.38 amid USD bullish pressure

Canada hasn't seen particularly outstanding data in the past few months and has largely been following the US Dollar in the ongoing regional trend in Forex:

Currencies have been moving in relative tandem where APAC currencies would mostly be moving together, same for European currencies, et cetera.That is making the Loonie relatively weaker, particularly after getting dragged down by a weaker USD since the beginning of August – EURCAD is for example back towards the high 1.60s after a failed lower-break attempt.

Let's have a look at the North-American pair by excellence, the USDCAD to spot our edge for upcoming trading.

The NA pair hasn't managed to form any trending action since the end of July, which also coincided with a major peak in the Dollar Index.

Since, prices have moved around 1,500 pips from the 1.3870 August 1st highs – But the ongoing USD strength may try to push the pair to retest these highs.

Let's have a closer look to spot if bulls can manage to break the consolidation region.

Looking closer to the 4H charts show rangebound action between 1.3720 August lows to the 1.38 immediate resistance zone.

However, we could see a head and shoulders pattern developing, which would take the pair to a test of its August 1st highs.

Sellers have stepped in to bring the pair back into the range – Look at a daily close above 1.38050 for higher odds of continuation.

On the other hand, bears would like to see a close below 1.38; a push below 1.3750 would invalidate the Head and Shoulders and would tilt the momentum a bit more bearish.

Levels to watch for USDCAD:

The 1H Chart does not offer much else in terms of price action except for an ongoing higher retest from the USD after hitting lows 1.3790 hourly lows from overbought levels.

I would suggest to keep an eye on the US Dollar for the session, as it (if it does) rises, it may also drag down risk-assets liek what's currently ongoing in Crypto.

Market Analyst