USDCAD Rebounds from 100-Day Moving Average; Key Levels Eyed

After touching a double top close to 1.42984 last Wednesday, the USDCAD reversed as sellers took charge. It dropped around 266 pips across the following five days, bottoming out at 1.4032.

Yesterday's decline pushed the exchange rate under its 100-day moving average, which was situated close to 1.4041. Sellers failed to extend the down move, and the price quickly recovered. They had an opportunity beneath a significant technical threshold but could not capitalize.

Sellers made another push during today's Asian and European trading sessions. The rate slipped under the 100-day moving average—now approximately 1.4042—falling as low as 1.4039 before bouncing back. A further try below the average similarly lacked sustained selling.

The rebound today had more strength than yesterday's, breaking past the early Asian session high and heading for the broken 38.2% retracement and swing level at 1.40818. It peaked at 1.4081, where sellers pushed back. The rate has since rotated down to about 1.4066.

The standoff between buyers and sellers is now clearly set.

To the downside, the 100-day moving average at 1.4042 remains the crucial gauge. Buyers held that line for two days in a row. Remaining above it keeps the recovery attempt alive. A sustained break below would shift the edge back to sellers, with the lows at 1.4039 and 1.4032 before the 50% midpoint at 1.40149. Getting below that midpoint would open the door for more selling.

To the upside, the 1.40818 retracement and swing level is the obstacle. Sellers have indicated a readiness to defend it. Buyers must move above and remain above that level to reinforce the recovery and open the way to the falling 100-hour moving average near 1.4112.

A key lesson is that any breakdown requires follow-through. Sellers had a chance once the pair moved under the 100-day moving average, but the fast recoveries showed their lack of sustained control. Buyers have obtained some respite, but the challenge at 1.40818 persists.

For the moment, the support level below holds and the resistance above remains. Traders are poised for the next trigger.