The USD/CAD currency pair on Wednesday bounced off the key support at 1.2557 to complete an upward breakout from a descending channel formation. The currency pair continues to trade within a descending trend formation after performing a late pullback.
The currency pair is now pinned just above the 100-hour moving average. Wednesday’s late pullback also prevented the pair from surging into the overbought levels of the 14-hour RSI.
USD/CAD Fundamentals Overview
From a fundamental perspective, the USD/CAD currency pair is trading at the back of a relatively busy period in both markets. On Wednesday, the Bank of Canada released its latest update on the monetary policy. The BoC chose to keep the base interest rate unchanged at 0.25%.
On the other hand, the US new home sales for December outperformed the (MoM) expectation of 0.76 million with a tally of 0.811 million. Earlier in the week, the housing price index for November beat the expected (MoM) change of 1% with a change of 1.1%, while the S&P/Case-Shiller Home Price Indices outshone the (YoY) estimate of 18% with a change of 18.3%.
The US had opened the week with disappointing data after the Markit Manufacturing, Services and Composite PMIs all missed expectations.
USD/CAD Technical Analysis (the 60-min Chart)
Technically, the USD/CAD currency pair seems to have recently completed an upward breakout from a descending channel formation in the 60-min chart. This indicates an attempt by the bulls to retake control of the market in the short term.
Therefore, they could target extended rebounds at about 1.2619, or higher at 1.2644. On the other hand, the bulls will be targeting short-term pullbacks at about 1.2577, or lower at 1.2557.
USD/CAD Technical Analysis (the Daily Chart)
In the daily chart, the USD/CAD currency pair appears to be trading within a descending channel formation, indicating a long-term bearish bias. However, the pair recently bounced off the trendline support to surge towards the trendline resistance.
Therefore, the bulls will be targeting potential breakout profits at about 1.2694, or higher at 1.2799. On the other hand, the bears could target long-term profits at about 1.2494, or lower at 1.2387.