TECHNICAL ANALYSIS
The US Dollar (USD) and the Canadian Dollar (CAD) are expected to react to their respective official labor market data releases scheduled for Friday. In the USD/CAD currency pair, there has been a breakout of an inverted Head and Shoulders chart pattern on the daily chart. This breakout suggests a potential bullish reversal after a period of consolidation. The neckline of this pattern was established based on the high from April 28th, which was at 1.3668. Additionally, the 50-day Exponential Moving Average (EMA) at 1.3500 has been acting as support for USD bulls. There is also a horizontal resistance level stemming from the high on October 12, 2022, at 1.3978.The Relative Strength Index (RSI) with a 14-day period has moved into the bullish range of 60.00-80.00, indicating the activation of a bullish momentum. If there is a clear break above the high from March 24th, approximately at 1.3800, it could open the door for further gains, potentially targeting the high from March 10th at 1.3860, followed by the psychological resistance level at 1.3900.On the other hand, in an alternative scenario, if there is a breakdown below the low from September 25th, around 1.3450, it may push the asset lower towards the low from September 20th, near 1.3400. A further decline could expose the asset to a six-week low, approximately at 1.3356.
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