Key Moments
- USD/CAD trades near 1.3580, staying within a descending channel that signals ongoing bearish pressure.
- The 14-day RSI is at 39, showing weak upside momentum despite a modest rebound.
- A daily close above the nine-day EMA at 1.3607 could reduce immediate selling pressure.
Technical Overview
USD/CAD held modest gains on Thursday, trading around 1.3580 in European hours. The pair remains inside a descending channel, which signals that the broader bearish trend is still intact.
The 14-day RSI stands at 39, reflecting fragile upside momentum after the recent bounce. USD/CAD trades below the declining nine-day and 50-day EMAs. The short-term EMA is below the medium-term EMA, and both slope downward, reinforcing the negative tone.
Key Technical Levels
Support is seen near the psychological 1.3500 level. A decisive move below this zone could push the pair toward the lower boundary of the descending channel around 1.3220. Meanwhile, the RSI below 50 keeps recovery attempts vulnerable. A daily close above the nine-day EMA at 1.3607 would ease some immediate selling pressure.
| Level / Indicator | Value / Description |
|---|---|
| Spot price (Thursday, European hours) | 1.3580 |
| Psychological support | 1.3500 |
| Lower boundary of descending channel | 1.3220 |
| Nine-day EMA | 1.3607 |
| Upper boundary of descending channel | 1.3690 |
| 50-day EMA | 1.3743 |
| Two-month high (Jan 16) | 1.3928 |
| 14-day RSI | 39 |
Potential Upside Scenarios
If buying interest strengthens, a sustained breakout above 1.3690 could shift focus to the 50-day EMA at 1.3743. Clearing that level would support a more meaningful recovery. The next reference point on the upside is the two-month high of 1.3928 from January 16.
Until these resistance levels are broken, rallies are likely to be viewed within the context of the prevailing downtrend.
Technical Origin
(This technical analysis was generated with the assistance of an AI tool.)
Canadian Dollar: Frequently Asked Questions
What key factors drive the Canadian Dollar?
The CAD is influenced by Bank of Canada (BoC) interest rates, oil prices, economic health, inflation, and trade balances. Market sentiment also matters: risk-on conditions tend to support the CAD. The US economy also affects the currency due to strong trade links.
How do BoC decisions impact the CAD?
The BoC sets interest rates, influencing borrowing costs across the economy. Its main goal is to keep inflation between 1-3%. Higher interest rates attract foreign capital, supporting the CAD. The BoC also uses quantitative easing (CAD-negative) or tightening (CAD-positive) to influence liquidity.
How does oil price affect the CAD?
Oil is Canada’s largest export. Rising oil prices increase demand for CAD, while falling prices weaken it. Higher oil prices also improve the trade balance, which further supports the currency.
How does inflation impact the CAD?
Higher inflation can prompt central banks to raise interest rates. This attracts global capital, boosting demand for the local currency. In Canada, this tends to support the CAD.
How does economic data influence the CAD?
Strong GDP, PMI, employment, and consumer sentiment attract investment and can encourage the BoC to raise rates. This strengthens the CAD. Weak data usually has the opposite effect.
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