USD/CAD Outlook: Appears Weak Around 1.3560 as Technical Signals Point to Further Downside

USD/CAD Holds Near Recent Lows Amid Modest Losses

During early European trading on Wednesday, the USD/CAD pair remains under slight pressure, hovering just above the mid-1.3500s and slipping by approximately 0.15% for the session. The pair continues to trade close to its lowest level in nearly a month, reached earlier this week, and appears susceptible to further declines.

The US Dollar (USD) is facing renewed selling interest, as market participants anticipate that current Crude Oil prices are unlikely to prevent the US Federal Reserve from considering interest rate reductions. This factor outweighs the impact of weaker oil prices, which typically dampen demand for the Canadian Dollar (Loonie), and contributes to the downward momentum in USD/CAD.

On the technical front, the pair’s recent drop below a short-term range and the 100-period Simple Moving Average (SMA) has provided a bearish signal for traders. The Relative Strength Index (RSI) is positioned in the low 40s, indicating a mild downward bias rather than an oversold scenario, which supports a short-term negative forecast.

The Moving Average Convergence Divergence (MACD) indicator is just above its Signal line and near the zero level, reflecting subdued momentum and a lack of strong directional movement. Despite this, the overall tone remains slightly bearish as the pair trades below the gently declining 100-period SMA on the 4-hour chart, currently around 1.3657, likely limiting any upward moves.

Resistance is initially found at 1.3600; a break above this level could lead to a test of the 1.3657 region, which aligns with the 100-period SMA and serves as a more robust barrier. Should the pair surpass this, 1.3690 would be the next significant resistance to watch for a potential shift in sentiment.

On the downside, immediate support lies at 1.3540. A decisive move below this point would open the door for a decline toward the 1.3500 level. To reverse the current mild bearish outlook, the pair would need to stage a sustained recovery above 1.3657, signaling a possible change to a more positive trend.

(This technical analysis was generated with the assistance of AI tools.)

USD/CAD 4-Hour Chart Overview