Market news

23 September 2022

USD/CAD Price Analysis: Eyeing a bull pennant on 4H and 1.3545 resistance

  • USD/CAD is taking a breather after a three-day relentless upsurge.
  • Markets remain risk-averse amid firmer yields and geopolitical woes.
  • The pair has spotted a bull pennant on the 4H chart, awaits confirmation.

USD/CAD is trading modestly flat below 1.3500 in Friday’s Asian trading so far, as bulls take a breather after three straight days of unrelenting rise.

Hawkish Fed outlook pushed US Treasury yields to multi-year highs, driving the US dollar index to fresh cycle highs of 111.81. The pair took cues from firmer yields and the dollar and hit the highest level since July 2020 at 1.3544.

Although the gains quickly faded after WTI surged 1% on Thursday amid escalating Russia-Ukraine tensions and hopes for a revival in Chinese demand. The sharp pullback in the US dollar also collaborated with the retreat in the major. The dollar corrected from two-decade highs after the Japanese yen intervention triggered a massive slump in the USD/JPY pair.

Looking ahead, the sentiment around the US dollar will continue to have a significant impact on the major, with eyes on the US S&P Global PMIs.

From a short-term technical perspective, USD/CAD is teasing a bull pennant breakout on the four-hour chart while challenging the falling trendline resistance at 1.3479.

A four-hour candlestick closing above the latter will confirm the bullish continuation pattern, opening doors for a retest of the two-year highs at 1.3544.

Ahead of that the 1.3500 round figure will offer a stiff resistance on the renewed upside.

The 14-day Relative Strength Index (RSI) has eased from the overbought region, still above the midline, justifying the bullish potential in the near term.

USD/CAD: Daily chart

On the flip side, failure to find acceptance above the aforesaid resistance at 1.3479 will recall sellers.

They will then aim for the 1.3450 psychological support. A sharp drop towards the bullish 21-Simple Moving Average (SMA) at 1.3390 cannot be ruled out.

USD/CAD: Additional levels to consider

 

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