USD/CAD Price Forecast: Hovers around 1.4200 after breaking below nine-day EMA

• USD/CAD may rebound toward the nine-day EMA of 1.4221.
• The 14-day Relative Strength Index is at 58.5, signaling steady upside momentum.
• The pair may fall toward the ascending channel bottom around 1.4130.

USD/CAD loses ground for the second successive day, trading around 1.4200 during Asian hours on Wednesday. The technical analysis of the daily chart indicates that the price is remaining within the ascending channel pattern, suggesting an ongoing bullish bias.

The USD/CAD pair is holding a bullish bias as spot remains above the 50-day Exponential Moving Average (EMA). The pair is marginally capped by the shorter-term nine-day EMA, while the 14-day Relative Strength Index (RSI) eases to 58.5, suggesting firm but not extreme upside momentum after recent overbought readings.

The USD/CAD pair may test the immediate resistance at the nine-day EMA of 1.4221, followed by the 18-month high of 1.4298, recorded on October 9. A successful break above this level would support the pair to test the top trendline of the ascending channel around 1.4410, followed by the psychological level of 1.4500.

On the downside, the USD/CAD pair may fall and navigate the region around the bottom trendline of the ascending channel around 1.4130, followed by the 50-day EMA of 1.4066.

Strategists at Scotiabank describe the short-term technical backdrop for USD/CAD as “bullish/neutral,” noting that the “RSI’s drift into the mid-60s is important as it reveals a clear moderation in bullish momentum following the September rally that had pushed the RSI toward 80, well above the overbought threshold (70).” This tempering in momentum is seen as a key signal that the earlier, more aggressive upside phase in the pair has begun to lose steam, even as the broader technical bias remains constructive.

Fed’s Collins keeps hawkish bias despite data-dependent tone

Fed’s Collins’ speech scores 7.1 on the FXS Speechtracker, modestly above the 6.7 historical average, signaling a slightly more hawkish stance relative to the established baseline. The emphasis on an “elevated risk of high inflation” as the main focus, expectations for inflation to remain above 2% due to high energy prices, and explicit support for the September rate hike all reinforce a bias toward tighter policy, even as the future path is framed as data-dependent and the job market described as broadly balanced and resilient. References to ongoing growth, job market stability, and data-center build-out pressures on inflation suggest the Fed is inclined to keep policy restrictive for longer to contain persistent price risks while relying on a stable labor market and consumer spending to absorb that stance.

The FXS Fed Sentiment Index fell by 2.23 points to 131.63, indicating a modest pullback in perceived hawkishness versus prior readings. However, with the index still well above the neutral 100 threshold, the Fed’s overall stance remains firmly in hawkish territory despite the slight softening captured by the FXS Fed Sentiment Index relative to the tone implied by the FXS Speechtracker.

(The technical analysis of this story was written with the help of an AI tool. Know more.)