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19.12.202414:38 Forex Analysis & Reviews: USD/CAD. Analysis and Forecast

Relevancia 06:00 2024-12-20 UTC--5

Exchange Rates 19.12.2024 analysis

Today, the USD/CAD pair continues its steady intraday pullback from the highest level since March 2020.

The decline can be attributed to some profit-taking amid overbought conditions on the daily chart. However, the broader fundamental backdrop still favors bullish sentiment. The Federal Reserve's cautious approach to easing monetary policy next year continues to support rising US Treasury yields. Additionally, geopolitical risks and fears of a trade war provide tailwinds for the US dollar. Meanwhile, political turmoil in Canada, the dovish stance of the Bank of Canada, and falling crude oil prices undermine the commodity-linked Canadian dollar, helping to limit the downside for the USD/CAD pair.

From a technical perspective, the Relative Strength Index (RSI) remains above the 70-mark, indicating overbought conditions. Nevertheless, the breakout of a multi-week ascending channel and subsequent acceleration to the upside were perceived as key bullish triggers, reinforcing the likelihood of dip-buying at lower levels. As such, any further corrective decline below the psychological 1.4400 level is likely to find solid support near the breakout point of the ascending trend channel.

The 1.4300 round level is a critical support to watch. A decisive break below this level could trigger technical selling, dragging the pair down toward support around the horizontal zone of 1.4250. The downward trajectory could extend further toward the 1.4220-1.4215 region and the psychological 1.4200 level.

Exchange Rates 19.12.2024 analysis

On the other hand, the 1.4450 level serves as resistance. Sustained buying beyond the 1.4450-1.4465 zone, or the multi-year high, would pave the way for the USD/CAD pair to retest the psychological 1.4500 level. Further upward movement has the potential to lift spot prices to the intermediate barrier at 1.4560, with an eventual rise toward the 1.4600 round level and the March 2020 high in the 1.4665-1.4670 level.

*El análisis de mercado publicado aquí tiene la finalidad de incrementar su conocimiento, más no darle instrucciones para realizar una operación.

Irina Yanina,
Analytical expert of InstaSpot
© 2007-2024
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