- USD/CAD’s rally helped by broad USD strength and WTI sell-off.
- Bull flag pattern spotted on the hourly chart.
- More gains on the cards amid bullish RSI.
USD/CAD is consolidating Wednesday’s rally to three-week highs of 1.3334, as the bulls take a breather before the next push higher.
The spot took advantage of the notable US dollar demand as a safe-haven, as the risk-off mood remained at full swing amid partial lockdowns announced in Germany and France, in the face of the coronavirus resurgence.
The lockdown fears induced sell-off in WTI also helped the loonie to take out the 1.3300 barrier while the Canadian dollar lost further ground after the Bank of Canada (BOC) pledged to maintain the current level of policy rate until the inflation objective is achieved. The central bank, however, recalibrated its quantitative easing program.
From a near-term technical perspective, the recent surge and the following consolidative mode has carved out a potential bull flag formation on the hourly chart, with the pattern likely to be confirmed on an hourly closing above the falling trendline resistance at 1.3326.
Another 100-pips rally could be in the offing on the bullish breakout, with eyes set on the 1.3450 level. The hourly Relative Strength Index (RSI) stays in the bullish territory while trading around 64.80, suggesting that the scope for the further upside still persists.
To the downside, 1.3285 is the level to beat for the bears. That level is the confluence of the 21-hourly moving average (HMA) and falling trendline support. Acceptance below the latter would expose the psychological level at 1.3250.
USD/CAD: Hourly chart
USD/CAD: Additional levels
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