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USD/Canada Breakthrough Declines, Indicator Divergence Is Hiring Opportunity for Bounce
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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Platform]: US dollar/Canada breaks through the downward triangle, indicator divergence indicates a rebound opportunity". Hope it will be helpful to you! The original content is as follows:
Before the US market on Wednesday (April 9), the US dollar/Canadian exchange rate fell to around 1.4180. The main factor that triggered the Canadian dollar's strength was the tariff policy announced by US President Trump, and the US dollar index (DXY) fell to around 102.00. The development of this series of trade tensions has heightened market concerns about a slowdown in U.S. economic growth, which has in turn increased expectations for the Federal Reserve to cut interest rates early.
Secondary Analysis
Elevation of trade frictions has become the main factor affecting the exchange rate of the US dollar/Canada dollar. Financial market participants are preparing for a significant rise in U.S. inflation and slowing economic growth as the escalating trade dispute could lead to a sharp decline in U.S. business activity.
Worries about the slowdown in the U.S. have prompted traders to increase bets supporting the Fed's interest rate cut at its May meeting. The probability of the Fed's rate cut in May has risen to 52.5% from 10.6% recorded a week ago, the CMEFedWatch tool shows.
At the same time, the Canadian government announced last week's 25% counter-tariff tariffs had xmaccount.come into effect on April 9, and the Canadian dollar is expected to remain volatile. A Canadian Foreign Ministry spokesman said on Tuesday that the countermeasures will "continue until the United States lifts tariffs on the Canadian auto industry."
Technical analysts' interpretation:
120-minute chart shows that the US dollar/Canada is forming a downward triangle pattern, with the price encountering important resistance above the 1.4250 level, and the downward support line connects the low points of 1.4025 and 1.4143, forming an upward trend line. Recently, the price has hovered around 1.4190 and is at the neckline of the pattern. MACD indicator displays DIFF line (-0.0001) is very close to the DEA line (0.0003), indicating that the kinetic energy is in the neutral area, but the bar chart gradually converges from negative value to zero, suggesting that the selling pressure is reduced. The RSI indicator is at 45.3207, in the neutral area and does not show overbought or oversold conditions. The CCI indicator reads at -48.8145, although in the negative area, it shows a potential bottom divergence xmaccount.compared to the price, with the price hitting a new low and the CCI failing to follow, which is usually a potential reversal signal. It is worth noting that MA14 (1.4213) forms a short-term resistance band, and if it can break through, it may accelerate the upward movement energy.
The daily chart further confirms that the US dollar/Canadian is in a key technical position. Prices have formed a downward trend within a larger time frame, falling from the 1.4792 high to the current level. The MA55(1.4318) and MA14(1https://xmaccount.com.4269) moving averages form a significant downward arrangement, confirming the short-term downward trend. However, it is worth noting that the price is close to the support area of MA200 (1.3994), which is a key indicator of the long-term trend. The MACD indicator shows that the DIFF line (-0.0032) is lower than the DEA line (-0.0022), and the bar chart is still green, indicating that the downward trend has not ended yet, but the strength is weakening. The RSI indicator reads 43.1543, close to the oversold area.
Future Outlook
Short-term Outlook: The US dollar/Canadian dollar is at a key technical decision-making point. The 1.4150-1.4100 area forms an important support belt and is also a key breakthrough position for the descending triangle pattern. If the downward trend is broken, it may test the previous low of 1.4025, and the further downward target is pointing to the 1.3900 area. However, the divergence signal of the CCI indicator suggests a possible rebound in the short term. If it can stabilize and stand on the 1.4250 resistance, it will open upward space to the previous highs of 1.4300 and 1.4364. The technical rebound may occur near the 1.4100 support level, in line with typical market behavior after entering the oversold area.
Medium- and long-term prospects: Despite the possibility of a rebound in the short term, the long-term downward trend of the US dollar/Canada has not changed. The downward channel on the daily chart is still intact, and the moving average system maintains a short arrangement. However, it is worth noting that tensions between the United States and its major trading partners may change in the xmaccount.coming weeks, and if there are any signs of easing, the dollar may rebound, putting upward pressure on the dollar/Canada. Policy signals from the Federal Reserve are also worth paying attention to, and if expectations of interest rate cuts are further strengthened, it may put additional pressure on the US dollar. The 1.4000 integer mark will be the medium- and long-term psychological support level. If it falls below, a new round of downward space will be opened. On the contrary, if fundamentals change, 1.4500 will become the key medium-term resistance level.
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