USDCAD has been in a steep uptrend since mid-September, storming to a fresh 29-month high of 1.3976 before experiencing a moderate pullback. Although the pair managed to recoup some losses after finding its feet at the 1.3500 region, the recent recovery appears to be running out of juice.
The momentum indicators currently suggest that bullish forces are waning. Specifically, the MACD histogram remains beneath its red signal line but in the positive territory, while the stochastic oscillator is pointing downwards after posting a bearish cross.
Should the negative momentum strengthen, the pair could encounter initial support at the double-bottom region of 1.3500, which overlaps with the 50-day simple moving average (SMA). Sliding beneath that floor, the bears might aim for the crucial July peak of 1.3222 before the attention shifts to 1.3074. Even lower, the September low of 1.2960 could appear on the radar.
Alternatively, if buyers re-emerge and push the price higher, the 1.3850 hurdle may act as the first line of defence. Crossing above the latter, the 29-month high of 1.3976 could provide further upside protection. Should that barricade fail, the price could ascend to form fresh multi-year peaks, where the May 2020 resistance of 1.4140 may curb any advances.
Overall, even though bullish pressures appear to be subsiding, USDCAD’s uptrend remains intact. Nevertheless, a dive beneath the 1.3500 floor is needed to trigger a moderate downside correction.