USD/CAD Price Analysis: Retreats below 1.3200 on mixed technical indicators

• USD/CAD falls under 1.3200 as Canadian bond yields bolster CAD.

• Failure to break 1.3100 enables recovery despite bearish RSI.

• USD/CADs recovery is reliant on reclaiming 1.3200 despite a bearish candle.

The USD/CAD has fallen beneath the 1.3200 level, largely driven by the bolstering effect of substantial yields on Canadian bonds, most notably the 3.385% yield observed on the 10-year note, which represents an increase of 0.53%. In addition, the 20-day Exponential Moving Average (EMA), looming around the 1.3240 mark, was used by USD/CAD sellers to open fresh positions, weakening the pair. Therefore, the USD/CAD is trading at 1.3183, down 0.23%, after hitting a daily high of 1.3232.

USD/CAD Price Analysis: Technical Outlook

From a technical standpoint, the USD/CAD shows a general downtrend. However, its inability to break below the 1.3100 mark has created an opportunity for a rebound. Following the USD/CAD recording an annual low of 1.3092, the USD/CAD experienced a surge towards 1.3220 before subsequently cutting back some of these earnings.

With the Relative Strength Index (RSI) aiming downwards at bearish territory would suggest that sellers remain in charge, except for the three-day Rate of Change (RoC), indicating that neither buyers/sellers are in control.

That said, if USD/CAD stays below 1.3200, the first support emerges at 1.3150. A breach of the latter will expose the 1.3100 figure, followed by the year-to-date (YTD) low of 1.3092. Conversely, if USD/CAD buyers reclaim 1.3200, despite printing a bearish candle, that would expose the 20-day EMA at 1.3240. Once cleared, the USD/CAD would rally toward 1.3300, followed by the 50-day EMA at 1.3323, before testing the 200-day EMA at 1.3373.

USD/CAD Price Action – Daily chart