USD/CAD Price Analysis: Discovers temporary support near 1.3450
The USD/CAD pair finds interim support near 1.3450 in the European session on Thursday after witnessing a sell-off in the last two trading sessions. The broader action in the Loonie asset is still lackluster as the United States economic calendar is light this week.
The US Dollar Index (DXY) oscillates in a tight range near 104.00 as investors have digested that the Federal Reserve (Fed) will not begin reducing interest rates until it gets confident that inflation will come down sustainably to the 2% target.
Boston Federal Reserve Bank President Susan Collins said on Wednesday that the central bank would be able to lower interest rates at some point later this year if economic data evolves consistently with their goals. Collins didn’t provide any significant timeline for rate cuts, citing she needs confidence that inflation will return to the 2% target.
Meanwhile, investors await Canada’s Employment data for further action. According to the estimates, Canadian employers hired 15K workers in January. The Unemployment Rate is expected to rise to 5.9% vs. 5.8% in December.
USD/CAD trades in an Ascending Triangle chart pattern formed on a four-hour timeframe, representing a volatility contraction but with a positive bias. The upward-sloping trendline of the aforementioned pattern is placed from December 29 low at 1.3178, while the horizontal resistance is plotted from January 17 high at 1.3542.
The Loonie asset finds a temporary cushion near the 50-period Exponential Moving Average (EMA), which trades around 1.3466.
The 14-period Relative Strength Index (RSI) oscillates in the 40.00-60.00 range, which indicates that investors await a fresh economic trigger.
The fresh upside would emerge if the Loonie asset climbed above the January 17 high at 1.3542, which will drive the asset towards the round-level resistance of 1.3600, followed by the November 30 high at 1.3627.
On the flip side, a sell-off could appear if the Loonie asset drops below January 31 low at 1.3359. This will expose the asset to January 4 low at 1.3318 and January 5 low at 1.3288.
