USDCAD had been in a steady downtrend since early March, generating a clear structure of lower lows. However, the pair found its feet at the 10-month bottom of 1.3091 and attempted to recoup some losses, with the price testing the ascending trendline that connects the pair's higher lows from November 2022 until early May.
The momentum indicators are endorsing this latest rebound. Specifically, the MACD is strengthening above zero and its red signal line at its highest level since June 1, while the RSI jumped above its 50-neutral threshold.
Should the price extend its advance above the upward sloping trendline, initial resistance could be found at the July peak of 1.3385. Piercing through that wall, the pair could face 1.3550 before the April peak of 1.3666 appears on the radar. If the latter fails, the spotlight could turn to the 1.3700 psychological mark, which held strong in December 2022.
Alternatively, should the recent rebound fizzle out, the price may retrace lower to test the April bottom of 1.3330 before a series of lows that constitute the ascending trendline come under examination. Thus, a drop below that region could trigger a decline towards the February low of 1.3262 ahead of the August 2022 bottom of 1.3225. Even lower, the 1.3115 hurdle could provide downside protection.
In brief, USDCAD has been staging a mild recovery after its steep decline came to a halt at a fresh 2023 low. For that rebound to continue, the price needs to decisively cross above the ascending trendline.