During Wednesday’s trading session, the US Dollar experienced renewed weakness against the Canadian Dollar, although the downward momentum appears to be slowing. Crucially, the USD/CAD pair is currently testing the 50-Day Exponential Moving Average (EMA), a level of significant historical importance.
Key Support Zone: 1.42 – 1.43
The 1.43 area has acted as a pivotal point in the past, and the underlying support may extend as far down as the 1.42 level. The confluence of the 50-Day EMA and this established support zone could present a potential buying opportunity for USD/CAD.
Technical Outlook Remains Bullish
While the USD/CAD has faced recent selling pressure, the longer-term technical outlook remains relatively strong. A considerable number of buyers are likely to emerge at these levels, although the timing of their entry remains uncertain. The 50-Day EMA is expected to generate a reaction, followed by potential support at the 1.42 level.
Friday’s Data: A Fundamental Catalyst
Beyond the technicals, the fundamental landscape will play a crucial role, particularly with Friday’s release of the Non-Farm Payroll data from the US and employment figures from Canada. Divergences between the two economies could trigger a substantial shift in the pair.
Bias: Buying Opportunity
While acknowledging potential near-term volatility, the overall bias remains towards buying the USD/CAD. A substantial fundamental catalyst would be required to justify shorting the pair, and the Canadian Dollar is not currently favored as a counter-currency for shorting the US Dollar.
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