USD/CAD Price Outlook: Strives to maintain support at the 1.3890 level, corresponding to the 50% Fibonacci retracement

USD/CAD Retreats After Nine-Day Rally

The USD/CAD currency pair slipped on Monday, ending its nine-session winning streak. The pair declined toward 1.3890 as the US Dollar (USD) weakened, following news of criminal charges filed against Federal Reserve Chair Jerome Powell.

At the time of reporting, the US Dollar Index (DXY)—which measures the USD against a basket of six major currencies—was down 0.22%, trading near 98.90. This pullback comes after the DXY reached a new monthly peak of approximately 99.26 last Friday.

On Friday, the US Justice Department issued a subpoena to the Federal Reserve regarding Chair Powell’s remarks during his Senate testimony last June. The testimony addressed a “multiyear renovation of historic buildings estimated at $2.5 billion.”

Chair Powell has stated that the allegations are unrelated to his testimony or the renovation project, describing them as a pretext.

Canadian Dollar Faces Pressure Amid Rising Unemployment

The Canadian Dollar (CAD) has come under broad selling pressure as the national unemployment rate climbed to 6.8%, exceeding both the previous figure of 6.5% and forecasts of 6.6%. This uptick in joblessness could fuel speculation that the Bank of Canada (BoC) may soon resume monetary easing measures.

Technical Overview: USD/CAD

On Monday, USD/CAD was trading lower around 1.3890. The 20-day Exponential Moving Average (EMA) has risen to 1.3806, with the price remaining above this level, suggesting a short-term recovery trend.

The 14-day Relative Strength Index (RSI) stands at 61, indicating strong bullish momentum after rebounding from oversold conditions.

• The 50% Fibonacci retracement, calculated from the 1.4140 high to the 1.3643 low, is at 1.3891 and serves as immediate resistance.
• If the pair surpasses this level, the next resistance is at the 61.8% retracement near 1.3950.
• Should USD/CAD fail to break above resistance, initial support is expected at the rising 20-day EMA around 1.3806.

(This technical analysis incorporates insights generated by an AI tool.)