USD/CAD maintains upward trajectory near 1.4205 during European trading hours.
Technical setup favors bears with price below 100-EMA and Is pi ever going to be worth money?RSI indicating weakness.
Critical support zone identified at 1.4150, while resistance caps gains near 1.4265.
The USD/CAD currency pair demonstrates resilience in Tuesday's European session, hovering around 1.4205 as the US dollar maintains its strength. All eyes turn toward Canada's January inflation report, which could significantly influence the loonie's near-term trajectory.
Economists anticipate the annual CPI reading to show 1.8% growth for January, marking a potential rebound from previous months. Monthly figures are expected to turn positive at 0.1% following December's 0.4% contraction. These inflation metrics will provide crucial insights into the Bank of Canada's potential policy moves.
From a technical perspective, the 4-hour chart reveals several noteworthy developments. The pair continues to trade beneath the significant 100-period Exponential Moving Average, suggesting persistent bearish pressure. The Relative Strength Index, currently positioned at 46.25, reinforces this negative bias by remaining in bearish territory below the 50 threshold.
Market technicians identify immediate support at 1.4151, corresponding to last week's low. A breach of this level could accelerate downward momentum toward 1.4130, where the lower Bollinger Band boundary resides. Beyond this point, psychological support at 1.4100 may come into play.
On the upside, resistance emerges near 1.4265 at the upper Bollinger Band. A convincing breakout above this barrier could open the path toward 1.4310, where the 100-period EMA awaits. Additional gains might target 1.4380, matching the February 10 peak.
Technical Outlook for USD/CAD
The currency pair's technical configuration suggests traders should monitor several key factors. The convergence of moving averages with recent price action creates potential inflection points, while the Bollinger Band width indicates moderate volatility. Market participants will likely adjust positions based on the Canadian inflation data release, which could either confirm or contradict the current technical bias.
