USDCAD could not find enough buyers to sustain Monday’s bullish extension above the flattening 200-weekly simple moving average (SMA) at 1.3026, with the price gearing down to meet support near its 20- and 50-day SMAs at 1.2894 on Thursday. Recall that the pair has been constantly fighting the 200-weekly SMA since May without success despite some strong flash upside spikes.
The pair is currently trying to recoup some ground ahead of Powell’s Jackson Hole speech, but the momentum indicators are sending only poor signals. Particularly, the RSI remains dim slightly above its 50 neutral mark, the MACD maintains a sideways trajectory above its red signal line, while the stochastics are sloping downwards.
If the bears squeeze the price below the 20-day SMA and the 1.2900 level, where the 38.2% Fibonacci retracement of the 1.2401 – 1.3222 upleg is positioned, traders will look next at the 50% Fibonacci of 1.2800. The 200-day SMA at 1.2764 might be the last opportunity for a rebound before the long-term support trendline drawn from the 20221 low of 1.2006 comes on the radar at 1.2660. Note that the 61.8% Fibonacci is also in the neighborhood. Hence, any violation at this point could generate more aggressive downfalls.
Alternatively, if the pair manages to close above the nearby resistance of 1.2963, the bulls may exchange swords again with the 200-weekly SMA and the 1.3026 barricade. The way higher may not be easy either as a sustainable move above the wall of 1.3057 – 1.3077 is required to drive the pair up to the critical bar of 1.3120. Should those boundaries prove fragile this time, the pair may have a direct flight to July’s top of 1.3222.
Summarizing, there is still a lack of buying confidence in USDCAD below 1.3026 for the third consecutive month. Unless the pair rallies sustainably above that threshold, downside pressures may persist.
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