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IPC Index — Mexico MarketUSD/CAD Price – Holds gains above 1.4200, bullish trend intact despite overbought signals
- USD/CAD gains momentum to near 1.4235 in Tuesday’s early European session.
- The pair keep the bullish vibe, but further consolidation cannot be ruled out with the overbought RSI.
- The first upside barrier emerges at 1.4310; the initial support level to watch is 1.4169.
The USD/CAD pair trades in positive territory around 1.4235 during the early European trading hours on Tuesday. The growing chances of Federal Reserve (Fed) interest rate hikes and optimism about the US economy provide some support to the US Dollar (USD) against the Canadian Dollar (CAD).
The key US jobs data for June will be in the spotlight later on Thursday. This report could give traders a greater sense of how accurately markets are pricing the chances of Fed rate hikes this year. Money markets showed traders fully expect one rate hike this year, with a roughly 50% chance of a second, according to LSEG data.
Crude oil prices have edged lower following a 60-day interim ceasefire agreement between the US and Iran. Traders will closely monitor the US-Iran peace talks in Doha, Qatar, later in the day. Positive developments surrounding the ceasefire deal could drag the crude oil prices lower. It is worth noting that Canada is a major oil-exporting country, and lower crude oil prices generally have a negative impact on the Canadian Dollar (CAD).
Technical Analysis:
In the daily chart, USD/CAD remains in a bullish near-term bias as spot holds above the 100-day Simple Moving Average (SMA) and the Bollinger middle band, reinforcing an underlying uptrend. The Relative Strength Index (14) stands at 82.4 sits in overbought territory, hinting that the latest advance could be stretched.
On the topside, immediate resistance is located at the Bollinger upper band at 1.4310, where buyers may hesitate to extend gains. On the downside, initial support is seen at the June 26 low of 1.4169, followed by the Bollinger middle band around 1.4068, before deeper demand emerges at the lower band near 1.3825 and the 100-day SMA at 1.3793, which together mark a more substantial structural floor.
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