Canadian dollar strengthens, USDCAD faces resistance

The USD/CAD continued its upward momentum yesterday, breaking above a key swing level at 1.4366 before pushing through the 38.2% retracement of the February high-to-low decline at 1.4395. This move signaled renewed buying interest, propelling the pair to a new corrective high of 1.4452 before sellers emerged.

That high pushed the price into a key resistance zone between 1.4448 and 1.4471, an area that has been technically significant in recent months. This zone marks the upper boundary of a consolidation range that defined trading from mid-December to late January. Volatility increased after the Trump Canada tariffs, briefly driving the price above this range before falling below the lower boundary at 1.4268 in February.

With USD/CAD now back inside this previous consolidation zone, momentum favors a potential retest of the upper boundary at 1.4471. This level also coincides with the 50% midpoint of the February trading range, making it a crucial pivot point for determining the next directional move.

Key Levels to Watch

• Support: The 38.2% retracement at 1.4395 (broken yesterday) now acts as a key short-term support. A move below this level would shift focus to the next support at 1.4366, a previously broken resistance level.
• Resistance: The 1.4471 level remains the major upside barrier. A confirmed break above this area would strengthen the bullish case and open the door for further gains.

Market Bias & Outlook

• Bullish Scenario: If buyers hold above 1.4395, the short-term bias remains bullish, with a push toward 1.4471 likely. A breakout beyond this level would confirm stronger upside momentum.
• Bearish Scenario: Failure to hold 1.4395 could lead to a deeper pullback, with 1.4366 as the next downside target. A move below this level would bring the broader consolidation range (Red Box) back into play, shifting the bias lower.

For now, buyers remain in control, but the Red Box consolidation zone still looms as a potential limiter. Keep an eye on 1.4395 for short-term bias clues—holding above it supports further upside, while a break below could see renewed downside pressure.

This article was written by Greg Michalowski at www.forexlive.com.