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Rebound, Not Reversal
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Economic
Summary:
USDCAD has found buyers near the key support level of 1.3746. While there are signs of improving market sentiment, the path of least resistance remains downward.
Sell
CLOSEDUSDCAD
End Time
1.39762
Entry Price
1.34720
TP
1.41990
SL
1.37332 -0.00717 -0.52%
2079
Points
Profit
1.34720
TP
1.37683
CLOSING
1.39762
Entry Price
1.41990
SL
Fundamentals
Since May 6, USDCAD has been on an upward trajectory, now having recovered to the key psychological level of 1.4000. Recently, with the conclusion of trade agreements and an overall rebound in market sentiment, the market has generally calmed, with volatility subsiding.
Thus far, May has been a challenging month for the Canadian dollar. Trade between Canada and the United States has not shown any signs of alleviating the tense situation between the two countries. The renegotiation of the United States-Mexico-Canada Agreement (USMCA) appears to be taking longer than other international trade agreements for both nations. Meanwhile, the US dollar has shown signs of recovery, though it still faces resistance ahead.
According to informed sources, US officials engaged in global trade negotiations have not attempted to include monetary policy commitments in the agreements.
Given the volatility of the US dollar and its lack of safe-haven appeal, asset managers should seek greater diversification in their foreign exchange reserves, especially considering the noticeable trend of exiting the US dollar in April.
Technical Analysis
The recent rebound in USDCAD is based on the key support level of 1.3746 not being breached. Subsequently, bulls successfully broke through the MA20, signaling a renewed short-term upside interest.
Momentum indicators have begun to rise, reinforcing the ongoing bullish momentum. However, for a genuine rebound to take place, bulls must decisively break through the near-term high of 1.4180. If achieved, the medium-term downtrend targeting the 1.3472 level would be invalidated.
It is important to note that the Relative Strength Index (RSI) is still hovering below the neutral 50 level, indicating that bulls have not yet fully taken control. Deeper pullbacks may find firmer support near the rising trendline from December 2023 at 1.3645. If the psychological level of 1.3600 is also breached, more aggressive selling could occur, heading towards the double-bottom area of 1.3472 from August to September.
Overall, USDCAD has found some bullish momentum in the short term, but unless it can decisively break through the key resistance of 1.4180, the rebound may be short-lived.
Trading Recommendations
Trading Direction: Sell
Entry Price: 1.4050
Target Price: 1.3472
Stop Loss: 1.4199
Valid Until: May 30, 2025, 23:55:00
Support: 1.3899/1.3845/1.3753
Resistance: 1.4019/1.4078/1.4180
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