USDCAD has been in a steep uptrend since mid-September when the price managed to forcefully cross above the 1.3222 region. Although the pair recently spiked higher to a fresh 29-month high, it quickly lost some ground, hinting that its latest rally could be overstretched.
The momentum indicators currently suggest that bullish forces are waning. Specifically, the RSI has fallen marginally below its 50-neutral mark, while the MACD histogram has dived beneath its red signal line but remains in the positive territory. Nevertheless, the price action remains above the Ichimoku cloud, endorsing that the short-term picture has not turned bearish yet.
Should the negative momentum strengthen, the pair could extend its recent decline and encounter initial support at the double-bottom region of 1.3500. Sliding beneath that floor, the bears might aim for the crucial July peak of 1.3222 before the attention shifts to 1.3074. Even lower, the September low of 1.2960 could appear on the radar.
Alternatively, if buyers re-emerge and push the price higher, the 1.3850 hurdle may act as the first line of defence. Crossing above the latter, the 29-month high of 1.3976 could provide further upside protection. Should that barricade fail, the price could ascend to form fresh multi-year peaks, where the May 2020 resistance of 1.4140 may curb any advances.
Overall, even though bullish pressures appear to be subsiding, USDCAD’s uptrend remains intact. Nevertheless, a dive beneath the 1.3500 floor could be the starting point of a moderate downside correction.
