USDCAD rose quickly above the tight bearish channel, but soon stopped around February’s lows and near its 20-day SMA on Thursday.
The pair is set to close the month down by 2.3%, marking its worst monthly performance since 2021. That said, the recent bullish channel breakout continues to look promising as both the RSI and MACD are showing a convincing improvement, indicating an encouraging start to July.
If the 20-day SMA at 1.3270 gives way, the price may advance straight to the broken, almost- flat support trendline from November 2022 seen at 1.3350. The 50% Fibonacci retracement of the 1.4667-1.2006 downtrend is adding extra importance to this region. Therefore, a successful move higher and above the nearby resistance of 1.3380 might add extra impetus to the price, bringing the 50-day SMA at 1.3420 next into view. Should the latter prove fragile, the recovery could pick up steam towards the 200-day SMA at 1.3500.
Alternatively, the price could slide to retest Thursday’s low of 1.3235. A continuation lower could examine the 1.3190 constraining zone ahead of June’s floor of 1.3145. Another failure here might threaten a downtrend extension towards the 1.3055-1.3000 zone, which encapsulates two key ascending trendlines from the 2021 lows and the 38.2% Fibonacci level.
In brief, USDCAD is expected to preserve its recovery mood, but traders might wisely wait for a close above the 20-day MA before they drive the pair higher.
