- USD/CAD rises above 1.3700 as gains continue for the second week in a row.
- Technical bias remains positive, but caution is emerging near the 50 SMA.
USD/CAD has traded mostly in positive territory since the beginning of May. After stabilizing around the 1.3500 area for the third time this year, the pair is now trying to close above the 50-day simple moving average (SMA) near 1.3735. The move follows President Trump’s comments expressing limited patience with Iran-related tensions as the two-day talks with China concluded.
Both the Relative Strength Index and MACD indicate improving buying momentum. However, the Stochastic indicator, which is hovering in the overbought zone, signals caution as the pair tests the 38.2% Fibonacci retracement level of the November-February decline near 1.3735. A decisive break above this level could pave the way towards the 200-day simple moving average and the 50.0% Fibonacci retracement level at 1.3810. A little higher, a decisive battle may emerge around the downtrend line connecting the 2025 and 2026 highs near 1.3860.
If the pair fails to maintain momentum above the 50-day simple moving average, it may pull back towards the 23.6% Fibonacci level at 1.3640. A deeper pullback could then lead to a retest of the 1.3500-1.3550 area, a break of which could reinforce the broader bearish outlook and expose the 2024 support level at 1.3420.
Overall, USD/CAD remains bullish in the short term, with further gains likely if buyers can decisively clear the 1.3735 resistance area. However, the broader outlook remains bearish as long as the pair remains below 1.3860.
