Market Analysis – December 18
The USD/CAD pair has entered a cautious pause, struggling to push above the 1.3800 handle after rebounding from lows around 1.3730. While the bounce suggests buyers are still present, the lack of follow-through highlights a market that is clearly waiting for direction.
Traders are keeping their risk in check ahead of the highly anticipated US Consumer Price Index (CPI) release, which could reshape expectations around Federal Reserve policy and inject fresh volatility into the pair. At the same time, the Canadian dollar is facing mixed signals—steady domestic inflation offers some support, but softer crude oil prices continue to limit upside momentum.
With both currencies pulled by competing forces, USD/CAD is hovering at a technical and fundamental crossroads, setting the stage for a potentially decisive move once fresh data hits the market.
USD/CAD Bearish Market at a Crossroad Near 1.38000
In December, the USD/CAD pair declined as the Canadian dollar strengthened against the US dollar. However, in recent trading sessions, the US dollar has attempted a rebound from below the 1.3800 level, as growing buying interest began to form around this area. Despite this recovery attempt, price action has struggled to gain traction and remains capped near the 1.3800 threshold after bouncing from around 1.3750.
Technical indicators suggest early signs of a rebound from near oversold conditions, but they also highlight persistent resistance at the 1.3800 level. This conflicting signal reflects the current indecision in the market, with neither bulls nor bears showing clear dominance.
At this stage, USD/CAD appears to be at a critical junction, where a fresh catalyst may be required to drive the next decisive move.
USD/CAD Short-Term Trend: Bullish Bias Confronted by Resistance at 1.3800
On the lower timeframes, USD/CAD shows a notable rebound, reflecting renewed bullish interest. However, recent trading sessions reveal repeated rejections near the 1.3800 level, highlighting the presence of strong bearish pressure at this threshold.
A clear breakout above 1.3800 is essential for the bullish momentum to extend further to the upside. For now, however, this level continues to hold firm as a key resistance zone, limiting the market’s upward progress.
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