In the early European trading session on Friday, the USD/CAD currency pair was trading around 1.3965, trimming some of its losses. However, the US Dollar (USD) continued to face downward pressure against the Canadian Dollar (CAD). This came as concerns over the global and US economies lingered, keeping investors on edge. Market participants were eagerly awaiting the release of the US March Producer Price Index (PPI) and the advanced Michigan Consumer Sentiment data later in the day, hoping for fresh insights that could influence the pair’s movement.
Technical Indicators Signal Bearish Sentiment
A glance at the daily chart reveals a rather bleak outlook for the USD/CAD pair. The pair is trading below the crucial 100 – day Exponential Moving Average (EMA), a sign that the bearish trend is likely to continue. Adding to this bearish sentiment is the 14 – day Relative Strength Index (RSI), which is currently near 32.60, well below the midline. This RSI reading indicates that the downward momentum is strong, and sellers are likely to remain in control in the near term.
Key Support and Resistance Levels
Looking at the support levels, the first line of defense for the USD/CAD pair is at 1.3842, which was the low recorded on November 7, 2024. If this level is breached, the pair could face further downward pressure, with the next significant support at 1.3750, the low from October 16, 2024. Deeper down, there’s another support level at 1.3480, the low set on October 1, 2024.
On the upside, the first major hurdle for the USD/CAD pair is the psychological level of 1.4000. If the pair manages to break above this level and sustain upward momentum, it could potentially rally towards 1.4113, the high seen on April 10. A decisive break above 1.4113 could then open the door for a move towards the 100 – day EMA at 1.4225.
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