USD/CAD Price Forecast: Strong buying interest evident as RSI hovers near 66

• Pressure on the Canadian Dollar from diverging Fed-BoC rate expectations keeps USD/CAD close to a one-month high.
• Strong buying momentum, reflected in an RSI near 66, supports the bullish USD/CAD outlook above the 50-day and 100-day SMAs.
• While initial support lies at 1.4200, the pair encounters its first resistance at 1.4300.

The Canadian Dollar (CAD) remains under pressure from broad US Dollar (USD) strength and differing interest rate expectations for the Federal Reserve (Fed) and the Bank of Canada (BoC). Against this backdrop, USD/CAD is largely unchanged on Thursday, staying close to a one-month high. The pair is trading around 1.4245 at the time of writing, a decline of 0.04% for the day.

Can the Canadian Dollar withstand USD strength as BoC rate hike bets recede?

With Canada’s labour market weakening relative to the US, TD Securities sees scope for further US Dollar gains against some major currencies. Its analysts note that “across global major currencies, we see room for the USD to rally selectively against CAD and KRW in the near-term.” They expect this employment divergence to underpin the pair, arguing that “diverging employment data releases will likely keep USDCAD supported above 1.40,”. TD specifically points out that a “rising unemployment rate amid falling wage growth rate in Canada also reduces the market pricing of a December BoC rate hike relative to the Fed,” supporting its view that the Canadian Dollar will face continued near-term pressure against the Dollar.

Technical Analysis: Can USD/CAD extend its advance?

Having recovered all its October losses, USD/CAD is trading above the 50-day and 100-day Simple Moving Averages (SMAs), leaving buyers in control. The 200-day SMA sits well beneath the prevailing price.

The Relative Strength Index (RSI), at around 66 and approaching overbought territory, reinforces the bullish momentum picture. Meanwhile, the Moving Average Convergence Divergence (MACD) holds in positive territory above its recent lows, suggesting that buying interest remains intact.

A pullback would first encounter support around 1.4200, before reaching 1.4120, a previous resistance level that now provides support. Further down, the trend-supporting moving averages, ranging from the 50-day SMA at 1.4074 to the 100-day SMA at 1.4044, should provide an additional cushion. Beyond that zone lies the longer-term 200-day SMA at 1.3909.

For buyers, the first hurdle is the October high around 1.4300. Clearing this resistance could allow the advance to extend towards the psychological mark of 1.4400.

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