Technical Analysis

USD/CAD Price Analysis – Nov 28, 2023

By LonghornFX Technical Analysis
Nov 28, 20233 min

Daily Price Outlook

The USD/CAD currency pair continued its three-day downward trend, remaining below the level of 1.3600 during the European session on Tuesday. However, the reason for its decline can be attributed to the recovery in crude oil prices and risk-on market sentiment, providing support for the Canadian Dollar and contributing to losses in the USD/CAD currency pair. Moreover, the bearish bias in the US dollar was seen as another key factor keeping the USD/CAD currency pair lower.

WTI Price Rebounds, Anticipation Builds for OPEC+ Meeting Impact on USD/CAD Pair

It is worth noting that the Western Texas Intermediate (WTI) price has bounced back after a four-day dip, currently sitting around $75.30 per barrel. Moving on, investors attention is on the upcoming important OPEC+ meeting, with many expecting a decision to further cut and prolong oil production limits. Therefore, this rebound in WTI price is giving a boost to the Canadian Dollar and contributed to the losses in USD/CAD pair.

US Dollar Index Hits Lowest Since August, Fueling USD/CAD Decline

Furthermore, the US Dollar Index (DXY) has hit its lowest point since late August, reaching 103.07 on Tuesday. This decline is fueled by lower US Treasury yields, specifically the 2 and 10-year bond yields, currently at 4.87% and 4.40%. However, the US Dollar faces pressure as traders factor in an anticipated 85 basis points cut by the Federal Reserve (Fed) in 2024. The risk-on sentiment is reinforced by a US Census Bureau report, showing a significant 5.6% drop in New Home Sales for October, below the expected 725K. Therefore the bearish US dollar has played its major role in undermining the USD/CAD pair.

 USD/CAD Price Chart – Source: Tradingview
 USD/CAD Price Chart – Source: Tradingview

USD/CAD - Technical Analysis

In the foreign exchange market, the USD/CAD pair exhibits a subtle yet notable shift in its recent trading pattern. As of today, the pair is trading at around 1.36, marking a slight decrease of 0.07%. This movement suggests a tempered bearish sentiment towards the US Dollar in comparison to the Canadian Dollar.

From a technical standpoint, the pair is currently navigating through a series of key levels that could influence its short-term trajectory. The pivot point is set at 1.3569, which will play a critical role in determining the immediate directional bias. On the resistance front, USD/CAD faces hurdles at 1.3669, followed by higher resistance levels at 1.3740 and 1.3840. These points are crucial in testing the pair's potential to regain bullish momentum. Conversely, support levels are observed at 1.3495, with subsequent supports at 1.3393 and 1.3296, which could provide stability against further declines.

The Relative Strength Index (RSI) for the pair is currently at 32, hovering near the oversold territory, but not quite there yet. This suggests that while bearish sentiment is present, the market is not in a state of extremity. Additionally, the pair is trading slightly below its 50-Day Exponential Moving Average (EMA) of 1.3600, reinforcing the short-term bearish outlook.

In conclusion, the overall trend for USD/CAD appears to be bearish, particularly if it remains below the 1.3643 level. The short-term forecast indicates that the pair may test its immediate resistance levels in the upcoming sessions. Market participants should closely monitor these technical levels and indicators, as they will be pivotal in shaping the USD/CAD pair's price movements in the near term.

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