The USD/CAD pair struggles to extend its rally above the round-level resistance of 1.3900 in Tuesday’s European session. The rally in the Loonie pair appears to have paused for a while, with investors focusing on a string of the United States (US) economic data to be released this week. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, edges lower in European trading hours but is close to a fresh almost three-month high near 104.60.

This week, investors will pay close attention to the US labor market-related indicators such as JOLTS Job Openings, ADP Employment and the Nonfarm Payrolls, Personal Consumption Expenditure Price Index (PCE), and the flash Q3 Gross Domestic Product (GDP) to get insights about the Federal Reserve’s (Fed) likely interest rate action in both policy meetings in November and December.

Meanwhile, the overall market mood appears to be very quiet, with investors remaining cautious about US presidential elections on November 5. Latest election polls have shown that the competition between Vice President Kamala Harris and former US President Donald Trump will be a tough call.

In the Canadian region, plunging Oil prices have dampened the Canadian Dollar’s (CAD) appeal. It is worth noting that Canada is the leading exporter of Oil to the US and lower fund flows into the oil-exporting region weakens its domestic currency.

USD/CAD is swiftly approaching the upper end of a year-long consolidation range near 1.3980. The outlook of the Loonie pair remains firm as it trades above the 20-week Exponential Moving Average (EMA), which trades around 1.3690.

The 14-day Relative Strength Index (RSI) climbs above 60.00, pointing to an activation in bullish momentum.

The Loonie asset could extend its upside towards the October 2022 high of nearly 1.3977 after breaking above Monday’s high of 1.3910. The asset will enter unchartered territory if it breaks above the annual high.

On the flip side, a downside move could appear if the asset breaks below the October 22 low of 1.3810. This would expose the asset to the 20-day EMA near 1.3770 and the October 16 low of 1.3750.

USD/CAD daily chart

(Click on image to enlarge)

More By This Author: