Photo by Michelle Spollen on Unsplash

• USD/CAD trades in positive territory for two straight days, adding 0.03% on the day. 
• The pair is poised to cross above the key EMA; RSI indicator returns to bullish territory above the 50-midline. 
• The first upside barrier is located at 1.3460; 1.3395 acts as an initial support level for USD/CAD.

The USD/CAD pair extends the rally around 1.3550 during the early European trading hours on Thursday. The US Dollar (USD) has attracted some buyers following the Federal Reserve (Fed) meeting on Wednesday. The Fed committee agreed unanimously to keep the benchmark Federal Funds Rate at between 5.25% and 5.5% for the fourth straight month. Additionally, the decline in oil prices exerts some selling pressure on the commodity-linked Canadian Dollar (CAD) and acts as a tailwind for the USD/CAD pair. 

According to the four-hour chart, USD/CAD is set to cross above the 50- and 100-period Exponential Moving Averages (EMA). The uptrend to resume once the pair can cross above the mentioned level decisively. It’s worth noting that the Relative Strength Index (RSI) returns to bullish territory above the 50-midline, supporting the buyers for the time being. 

The upper boundary of the Bollinger Band at 1.3460 will be the immediate resistance level for the pair. Any follow-through buying above 1.3461 will see a rally to the 1.3500 psychological round figure. Further north, the next hurdle is seen at a high of January 25 at 1.3535. 

On the other hand, a low of January 30 at 1.3395 acts as an initial support level for USD/CAD. A bearish breakout below the lower limit of the Bollinger Band at 1.3378 will pave the way to a low of January 31 at 1.3358, followed by the 1.3300 round figure, and finally near a low of January 2 at 1.3228.  

USD/CAD four-hour chart

USD/CAD

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