USDCAD climbs post-Fed; breakout tested at 1.4000

Following the FOMC rate decision, the USDCAD pair rose, breaking through several key technical levels. The move has given buyers greater control, though the immediate challenge is sustaining the breakout and overcoming resistance around 1.4000.

Prior to the decision, the pair had been confined between the four-hour 200-bar moving average (1.3888) and the 100-day moving average (1.3939). After the Fed announcement, it climbed past the 100-day moving average, the 38.2% Fibonacci retracement at 1.3931, and the swing zone from 1.3948 to 1.3966.

This swing region now serves as initial support. Following a breakout, the previous resistance turns into support, and as long as the price holds above 1.3948–1.3966, buyers retain the upper hand.

Steps for the buying side

The bulls need to push the pair above and hold above the 1.3990–1.4003 resistance band. The 50% retracement of the drop from June's peak, at 1.39915, sits within this zone.

This area is significant because it combines the swing region, the retracement point, and the psychologically important 1.4000 level.

Should buyers manage to climb above 1.4003 and maintain ground, the subsequent targets include:

• The 61.8% Fibonacci retracement level of 1.4052.

• The upper swing zone spanning 1.4117 to 1.4149.

Tasks on the sellers' side

During the first test of the 50% retracement and the 1.3990–1.4003 zone, sellers stepped in. This provides a clear risk reference for traders.

To regain influence, sellers must first drive the price under the 1.3948–1.3966 support zone. A drop beneath that area would erode bullish strength and bring the 38.2% retracement (1.3931) and the 100-day moving average (1.3939) back into the picture.

Falling below those levels would expose the four-hour 200-bar moving average at 1.3888, which marked the lower boundary of the pre-FOMC trading range.

Technical principle: support after resistance breakdown

After a price breaks through a resistance zone, that zone frequently turns into support on any retreat. Breaking through is only the initial move; maintaining a position above the former resistance confirms that buyers remain in charge.

For the current USDCAD scenario, the 1.3948–1.3966 swing zone originally acted as resistance. Now that price has moved above it, the same area can be used to assess whether the breakout is genuine or losing steam.

As long as the price stays above the support zone, buyers maintain the advantage. A drop back below would signal that the bullish breakout is weakening.

Roadmap for the pair

• Bullish scenario: Hold above 1.3948–1.3966 and clear 1.4003. This would pave the way to 1.4052 and then to the 1.4117–1.4149 zone.

• Bearish scenario: Drop below 1.3948 and subsequently below the 1.3931–1.3939 support cluster. That would undermine the breakout and redirect attention to 1.3888.

• Near-term outlook: Buyers currently hold the advantage, but they must still push above and hold above the 1.3990–1.4003 resistance zone.

Price movements at these key levels will offer the next hint about direction.