USDCAD Approaches Key Support Level After Recent Rally

The USDCAD currency pair reached its highest level since August 8, trading at 1.4023, as buyers pushed the price above the significant 1.4000 mark. However, the rally fell short of the next target at the 61.8% retracement level of the decline from the June high, which is set at 1.40502. The price stalled approximately 27 pips below this level, prompting profit-taking and a return of sellers to the market, which has since driven the price back toward the 1.4000 area.

The focus now shifts to a critical support zone between 1.3990 and 1.4003, which has historically been a decision point for traders since June. This area, along with the 50% retracement level at 1.39893, is crucial for determining the market's short-term bias. If USDCAD can maintain its position above this support zone, it may indicate that the recent dip is merely a correction within a broader upward trend. Conversely, a sustained break below 1.39893 could signal a shift in momentum favoring sellers, with potential targets including the rising 100-hour moving average at 1.3972.

Traders are now watching closely to see if buyers can defend the 1.4000 area and push the price back above 1.4023. Success in this endeavor would suggest that sellers are losing their grip and could pave the way for a renewed attempt to reach the 61.8% retracement level. On the other hand, if sellers manage to establish control below the key support levels, it could lead to increased bearish pressure and a deeper corrective move.

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Source: KLEA News