USD/CAD Buyers Eye Opportunities Ahead of Manufacturing PMI
Market Overview
On Thursday, the US dollar experienced a modest pullback as traders adjusted positions in the early days of the new year. Despite this decline, the greenback remains near its two-year highs, bolstered by the Federal Reserve’s hawkish stance and market expectations for policy direction under the upcoming Donald Trump administration. These factors are likely to provide short-term support to the dollar, maintaining its appeal as a safe-haven currency.
Technical Analysis
The USD/CAD pair is currently trading within a consolidative range on the hourly chart. Early European trading in the first session of 2025 saw renewed buying interest, pushing the pair toward its initial resistance at 1.44098. A breakout above this level could pave the way for further upside, with immediate targets at 1.44198, 1.44337, and the key level of 1.44490.
Momentum indicators reinforce the bullish narrative. The RSI is approaching overbought territory, signaling strong buying pressure, while the MACD shows a bullish divergence with its moving averages, indicating growing momentum in favor of buyers.
Conversely, failure to maintain upward momentum could see the pair retreat toward key support levels. Immediate supports are located at 1.43936 and 1.43688. A break below these levels would signal increased selling pressure and a potential shift in sentiment.
Key Levels
- Resistance Levels: 1.44098, 1.44198, 1.44337, 1.44490
- Support Levels: 1.43936, 1.43688
Key Events to Watch
Today’s US economic calendar includes critical data releases that could significantly impact the USD/CAD pair. Weekly jobless claims and the November Manufacturing PMI are due, with the latter expected to decline slightly from previous readings. If the data meets or falls short of expectations, it could exert downward pressure on the US dollar.
Additionally, the US crude oil inventory report is expected later in the session. A sharper-than-expected drawdown in stockpiles could boost the Canadian dollar, given Canada’s reliance on oil exports, thereby influencing the USD/CAD dynamic.
Conclusion
USD/CAD buyers are testing key resistance levels, with immediate upside targets contingent on sustained momentum. Economic data releases, including US Manufacturing PMI and crude oil inventories, are likely to drive short-term volatility and influence the pair’s trajectory. A break above 1.44098 confirms bullish control, while failure to do so may redirect focus to support levels.
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