During the early European trading hours on Tuesday, the USD/CAD pair encountered a loss of traction near its intraday low. The decline in the US Dollar (USD) is acting as a hindrance for the pair, marking a 0.22% decrease on the day and currently trading at 1.3510.
Notably, the Canadian Ivey Purchasing Managers Index (PMI) for January, scheduled for release later on Tuesday, is anticipated to ease to 55.0 from December’s 56.3. This event is likely to influence the pair’s trajectory as traders assess its impact on the Canadian Dollar (CAD).
Technically, USD/CAD has resumed its uptrend, maintaining a position above the 100-period Exponential Moving Averages (EMA) on the four-hour chart. The Relative Strength Index (RSI) above the 50.0 midline suggests a favorable environment for further upside potential.
The primary upside barrier for USD/CAD is anticipated near the January 5 high at 1.3545, with potential follow-through buying pushing the pair towards the upper boundary of the Bollinger Band at 1.3569. A sustained break above this level could pave the way for a rally to the December 12 high at 1.3618, followed by the November 27 high at 1.3711.
Conversely, in a bearish trading scenario, initial support is observed near the February 1 high at 1.3460. Subsequent downside targets include the 100-period EMA at 1.3443, followed by 1.3395 (low of January 20), 1.3365 (low of February 2), and ultimately 1.3347 (the lower limit of the Bollinger Band). Traders will closely monitor these levels for potential shifts in market dynamics.
