USD/CAD Forecast: Continues to Threaten Major Resistance Barrier

• The USD/CAD has fallen slightly during the trading session on Monday to kick off the week against most currencies, the Canadian dollar included.
• However, unlike a lot of the other payers, the Canadian dollar could not hang on to too much of the gain, and we have already started to turn around to show signs of life.
• The 1.38 level is a significant situation as far as resistance is concerned, and therefore we need to pay close attention to what happens next.

If we do break above the high of the trading session on Friday, that opens up the possibility of a push toward the 1.40 level. The 1.40 level is an area where a lot of people will have to pay close attention as it is a large, round, psychologically significant figure, and an area where we would see a potential move toward the 1.45 level if we can break above it. It’s worth noting that we have recently formed a bit of a “W pattern”, and if it kicks off it measures for a move all the way to the 1.46 level above, which has been an area of selling pressure back in 2020.

The Market that Will Try to Go to the Upside

Crude oil markets obviously have an influence on this market, as Canada is a major exporter, and therefore you will have to pay close attention to that as well. The Bank of Canada has already suggested that they are basically done with interest rate hikes, so that’s part of the reason why the Lonnie has struggled as of late, not only against the United States dollar but most other currencies around the world.

It’s probably worth noting that the bottom of the “W pattern” is sitting just above the 50-Day EMA, which of course is a widely followed technical indicator. Ultimately, I think this is a market that will try to go to the upside given enough time, and this might be a noisy area, to say the least. You need to be very cautious with your position sizing, but it’s clear that the buyers are in control now, as even though we pulled back a couple of times, the resiliency has most certainly been on the side of the US dollar bulls, at least in this pair as things stand now.