The USD/CAD pair has extended its losses for the second consecutive session, dipping near 1.3470 during Tuesday’s European session. A prevailing cautious sentiment looms over the market as traders brace for the imminent release of the Consumer Price Index (CPI) data from the United States (US).
Amid this uncertainty, the USD/CAD pair may encounter crucial support around the major level of 1.3450, with additional reinforcement from the 38.2% Fibonacci retracement level at 1.3442. A breach of this level could intensify downward pressure, prompting a descent towards the support zone near last week’s low of 1.3419 and the psychological barrier of 1.3400.
Technical indicators present a mixed picture. The 14-day Relative Strength Index (RSI) is below 50, signaling bearish momentum. However, the Moving Average Convergence Divergence (MACD) suggests a potential shift, with the MACD line positioned above the centerline but diverging below the signal line. Traders are likely to await confirmation from the MACD, a lagging indicator, to ascertain a definitive directional trend.
On the upside, immediate resistance is anticipated at the psychological level of 1.3500 and the nine-day Exponential Moving Average (EMA) at 1.3506. A breakthrough above the latter could provide upward support, paving the way for the USD/CAD pair to test the major level of 1.3550. Further upward momentum may target the zone around the psychological level of 1.3600, aligning with March’s high of 1.3605. As the market awaits the US CPI data, traders remain vigilant for potential shifts in the pair’s trajectory.
