USDCAD refreshed a seven-year high on Thursday before reversing from a downward sloping trend line from December 2021. The overbought RSI condition on the daily chart also seemed to have challenged the pair bulls. However, the Loonie pair’s ability to stay well beyond the 200-DMA amid bullish MACD signals hints at the quote’s strength. Hence, a clear break of the aforementioned resistance line, at 1.2860 by the press time, is more likely and could escalate the run-up towards December’s peak of 1.2963, a break of which won’t hesitate to challenge the 1.3000 psychological magnet.
Alternatively, pullback moves may initially aim for the 38.2% Fibonacci retracement (Fibo.) of October-December upside, around 1.2700 at the latest. However, the bears will remain confused until witnessing sustained trading below the 1.2630 level comprising the 200-DMA and 50% Fibo. Following that, the pair’s south-run towards the last week’s bottom surrounding 1.2460 can’t be ruled out.
Overall, USDCAD bulls have controls but the upside momentum needs validation, which in turn highlights today’s US Core PCE Price Index data for March, the Fed’s preferred gauge of inflation.