The US dollar remains depressed against the Canadian dollar and currently trades at the lowest level in nine months after falling the most in a week.
A number of factors are currently weighing on the USDCAD pair, however, some technical indicators are flashing oversold, and sentiment is also at extreme levels.
Also, the US Dollar falls after snapping three-day uptrend despite hawkish testimony of Fed Chair Powell. The risk catalysts remains as we see the second part of Powell’s testimony.
Going forward, if the USA and Canadian central banks remains in divergence policy wise, we are likely to see more USDCAD downside. The only potential issue could be higher oil prices boosting the Lonnie.
Very high levels of bullish sentiment are still being seen towards the USDCAD pair, with some 90 percent of traders currently holding a positive view towards the USDCAD pair.
With the strong bullish sentiment bias probably hints that more downsides could happen as retail are typically on the wrong side of the trade.
USDCAD Short-Term Technical Analysis
The USDCAD pair has been in a large downtrend over recent sessions. The MACD indicator also shows that large amounts of bullish divergence remain until 1.3500.
The Ichimoku indicator also shows that the cloud is thinning out, meaning the downtrend is weakening. According to technical analysis we could be close to an explosion towards 1.3500.
USDCAD Medium-Term Technical Analysis
The USDCAD pair has recently broken strong technical support and is dropping to new yearly lows and has not yet found a meaningful bottom of its price range.
It should be noted that the price is below the Ichimoku cloud, and the lagging line is generating a strong sell signal right now. The top of the cloud is found around 1.3500. Near-term support is found around the 1.3000 level.