USDCAD has been in a steep uptrend since mid-September when the price managed to forcefully cross above the 1.3222 region. Although the pair spiked higher to a fresh 29-month high in the previous daily session, it quickly corrected lower and closed the day with losses, hinting that the rally could be overstretched.
The momentum indicators currently suggest that bullish forces are waning. Specifically, the stochastic oscillator is sloping downwards after posting a bearish cross, while the MACD histogram has retreated beneath its red signal line but remains in the positive territory.
Should the negative momentum strengthen, the pair could extend its recent retreat and encounter initial resistance at the 1.3675 region. Sliding beneath that floor, the bulls might aim for the recent low of 1.3500 before the attention shifts to the July peak of 1.3222. Even lower, the 1.3074 barrier could prove to be a tough one for the price to overcome.
Alternatively, if buyers re-emerge and push the price higher, the 1.3840 hurdle may act as the first line of defence. Crossing above the latter, the 29-month high of 1.3876 could provide further upside protection. Should that barricade fail, the price could ascend to form multi-year peaks, where the May 2020 resistance of 1.4140 may curb any advances.
Overall, even though bullish pressures appear to be subsiding, USDCAD’s steep uptrend remains intact. Nevertheless, a dive beneath the 1.3500 floor could be the starting point of a moderate downside correction.