The USD/CAD currency pair lost ground for the second consecutive day, trading around 1.4200 during Asian hours on Wednesday after breaking below the nine-day Exponential Moving Average (EMA) [1]. Despite this pullback, the pair remains within an ascending channel pattern and above the 50-day EMA, indicating an ongoing bullish bias according to technical analysis [1]. The 14-day Relative Strength Index (RSI) has eased to 58.5, reflecting firm but not extreme upside momentum following recent overbought conditions [1].
Immediate resistance for USD/CAD is identified at the nine-day EMA of 1.4221, with further upside targets at the 18-month high of 1.4298 (recorded on October 9), the top trendline of the ascending channel around 1.4410, and the psychological level of 1.4500 [1]. On the downside, the pair may find support at the bottom trendline of the ascending channel near 1.4130 and the 50-day EMA at 1.4066 [1].
Strategists at Scotiabank describe the short-term technical backdrop for USD/CAD as 'bullish/neutral.' They note that the RSI's drift into the mid-60s signals a moderation in bullish momentum after the September rally, which had pushed the RSI toward 80, well above the overbought threshold of 70 [1]. This moderation is seen as a key signal that the earlier, more aggressive upside phase has begun to lose steam, even as the broader technical bias remains constructive [1].
On the macroeconomic front, comments from Fed’s Collins maintained a hawkish bias, emphasizing the elevated risk of high inflation and supporting the September rate hike, while also noting that future policy remains data-dependent [1]. The FXS Fed Sentiment Index fell by 2.23 points to 131.63, indicating a modest pullback in perceived hawkishness, but the index remains well above the neutral threshold, suggesting the Fed's stance is still firmly hawkish [1].
CONCLUSION
USD/CAD is consolidating near 1.4200 as bullish momentum moderates, with technical indicators suggesting a constructive but less aggressive upside outlook. The Fed's continued hawkish stance, despite a slight softening in sentiment, may keep the pair supported, but traders are watching for further data and technical signals to determine the next move.