USD/CAD Rally Gathers Steam Following Wedge Breakout.

USD/CAD Rally Gathers Steam Following Wedge Breakout
USD/CAD Rally Gathers Steam Following Wedge Breakout
The USD/CAD pair continues to climb following Friday’s break out from a rising wedge pattern. The pair is now on track for its third successive day of gains and should break above the 1.3460 psychological level to test the upside target at 1.3700.

Traders will focus on Friday’s 1.30pm US Q4 GDP and Fed core PCE releases for clues about the Fed’s monetary policy outlook and how it might move the US Dollar. This will likely have a significant impact on the currency pair, with any unexpected results from these key data releases expected to trigger a strong reaction in the pair.

Euro/USD Chart and Technical Analysis
EUR/USD is firmly in the red, but has managed to rebound slightly from Thursday’s low as risk-aversion continues to push markets lower. The pair remains range-bound between 1.0800 and 1.0750, as well as around a key support line from last week’s 1.0835 high on a daily chart closing basis. The pair also looks set for a bounce off of Tuesday’s low at 1.0836 on a weekly chart closing basis.

The currency pair is now trading below a 100-day Exponential Moving Average (EMA) at 1.0850. This is a significant reversal from the rally seen after last Friday’s US Non-Farm Payroll report, when the pair surged above the 1.0800 mark.

Aside from the EMA, the next crucial support for the pair is its 50-day Exponential Moving Average at 1.0579, and, ultimately, the 20-day EMA at 1.0533. If the pair holds above this point, it could be heading towards the late April 2022 highs at $1.0936 to $1.094, a 50% retracement of the 2021 to 2022 decline.

Australian Dollar Chart and Technical Analysis
AUD/USD is set to post minimal losses on Friday, as traders eye the Reserve Bank of Australia’s Governor speech alongside an improving Aussie employment situation and a busy week of US inflation and retail sales data. AUD/USD is currently trading at 0.6918 after hitting a fresh nine-month high of 0.6960 earlier this week.

USD/CAD charts and Technical Analysis
Despite the US dollar’s strength, the USD/CAD pair has still seen its traditional relationship hit price parity in the past. This is the case when the Canadian dollar rises against the United States dollar, which is often due to economic weakness in the U.S. or to an increase in oil prices. It has also happened when the Federal Reserve is in the process of cutting interest rates in the U.S. This has a large impact on the value of the Canadian dollar, since it requires more Canadian dollars to buy one United States dollar.