Key Takeaways:
USD/CAD rose for a seventh consecutive session, hitting a 14-month high of 1.4159 on Friday as the pair extended its rally within an ascending channel.
"The steeply overbought reading in the 14-day Relative Strength Index near 85 hints that upside momentum could be stretched even as the broader structure remains supported," according to technical analysis from FXStreet.
The pair traded at 1.4140 during European hours, holding well above both the nine-day exponential moving average at 1.4038 and the 50-day EMA at 1.3850. The RSI's climb into overbought territory — above the 70 threshold — suggests the pace of gains may be unsustainable in the near term, though the ascending channel pattern that has guided price action remains intact.
A sustained break above the 1.4159 resistance zone, which aligns with the upper boundary of the ascending channel, would open the door for further upside. On the downside, a move below the nine-day EMA at 1.4038 would weaken near-term momentum and expose the channel's lower boundary near 1.3940. A deeper decline would target the 50-day EMA at 1.3850.
The Canadian dollar weakened against most major peers on Friday, with the loch losing the most ground against the Japanese yen. The US dollar's broad strength, supported by the Federal Reserve's hawkish policy stance, has been a key driver of the pair's seven-day rally. The next catalyst for the pair will be upcoming Canadian economic data and any shifts in oil prices, given the loonie's sensitivity to crude markets.
This article is for informational purposes only and does not constitute investment advice.
