USDCAD looks to be creating a floor around the 40-day simple moving average (SMA) below the 1.2900 round number. The technical indicators are failing to suggest a clear sign as the MACD is holding below its trigger line around the zero level, while the RSI is pointing slightly up near the neutral threshold of 50.
Traders, however, would be more eager to engage in buying activities if the price manages to remain above the 40-day SMA and meet the 1.2935 resistance, which coincides with the 20-day SMA. If this is successfully breached, then the rally may next rest somewhere between 1.3175 and the 20-month high at 1.3225. A closure above the latter may be needed to push the price towards the 1.3385, reached in October 2020.
On the flip side, the selling pressure could accelerate again in the short term if the market deteriorates below the 40-day SMA and the 1.2820 support. Such a move could next bring the 200-day SMA at 1.2710 into the spotlight, which if violated could trigger sharper losses, probably towards the long-term ascending trend line at 1.2600.
In the long-term timeframe, the pair has been in a bullish trend since June 2021 and only a slip beneath the 200-day SMA and the diagonal line would put the market on a sideways path.
Summarizing, USDCAD is expected to show improvement if the price overcomes the short-term SMAs. In the medium-term, a stronger push up above 1.3225 is required to upgrade the positive outlook.
