USDCAD has staged an impressive breakout above the key resistance zone around the 1.3800 major psychological mark, reaching highs near 1.3882 before entering a corrective phase.
The pair is currently trading at 1.3738, pulling back toward critical Fibonacci retracement levels that could present attractive entry points for bullish continuation.
The recent rally from the July lows around 1.3574 represents a significant shift in momentum, with price successfully breaking above both the descending trend line resistance and the confluence zone near 1.3700-1.3750. This breakout signals that the path of least resistance has turned to the upside.
The current pullback is testing the 50% Fibonacci retracement level at 1.37279, which coincides closely with current price action and could serve as a critical support zone. Should this level fail to hold, the next area of interest lies at the 61.8% Fibonacci retracement at 1.36916, which aligns with the previous resistance-turned-support area.
The moving average structure remains constructive for bulls, with the 100 SMA positioned above the 200 SMA, confirming that the medium-term trend has shifted bullish. The recent breakout above both moving averages further reinforces this positive outlook, as these indicators could now act as dynamic support on any deeper corrections.
Stochastic has retreated from overbought territory and is currently declining toward the midpoint, suggesting that the correction could continue in the near term. However, this pullback appears healthy and necessary to reset momentum for the next leg higher.
RSI has also cooled from elevated levels and is approaching the 50 level, indicating that buying pressure is being absorbed without turning overly bearish. The oscillator remains well above oversold conditions, suggesting that sellers lack conviction.
If the Fibonacci support levels can attract renewed buying interest, USDCAD could resume its climb toward the recent highs and potentially target the psychological 1.3900 level, with further upside toward 1.4000 possible on continued bullish momentum.