USD/CAD Price Outlook: Continues upward momentum for a fifth consecutive session

USD/CAD Continues Upward Momentum

The USD/CAD currency pair has now advanced for five consecutive trading sessions, climbing by 0.25% to approach the 1.3770 level during Monday's European market hours. This movement is driven by a strengthening US Dollar and a weaker Canadian Dollar amid a generally negative market sentiment.

Currently, the US Dollar Index (DXY)—which measures the Dollar against a basket of six major currencies—has risen by 0.2% and is trading close to 98.60.

Heightened geopolitical tensions, particularly following a recent US strike on Venezuela, have prompted investors to adopt a more cautious, risk-off approach.

Looking ahead, the US Dollar is likely to experience increased volatility this week as several key US economic indicators are set to be released, with particular attention on the upcoming Nonfarm Payrolls (NFP) report.

For Monday, market participants will be watching the release of the US ISM Manufacturing PMI data for December, scheduled for 15:00 GMT. Expectations are for the index to edge up to 48.3, slightly above November’s reading of 48.2.

Technical Overview: USD/CAD

On the daily chart, USD/CAD is trading at 1.3768. The 20-day Exponential Moving Average (EMA) has leveled off at 1.3765 after a period of decline, with the price just above this average. A daily close above the 20-day EMA could signal the formation of a short-term support base, while a drop back below may maintain the current bearish outlook. The Relative Strength Index (RSI) has rebounded to 46 from oversold territory but remains below the neutral 50 mark. The 61.8% Fibonacci retracement, calculated from the 1.3540 low to the 1.4141 high, sits at 1.3770 and acts as initial support.

• If buyers manage to keep the price above the 20-day EMA, a move toward the 50% retracement level at 1.3840 is possible.
• Failure to hold above the nearby support could leave the pair vulnerable to further declines.
• A break above the RSI 50 level would strengthen recovery prospects, while rejection below this threshold may limit upward moves.

(This technical analysis was prepared with assistance from an AI-powered tool.)