USD/CAD Price Forecast: Rising wedge support near 1.4250 comes under test

• Around 1.4250, the rising wedge’s lower boundary could provide the first support for USD/CAD.
• At 67.2, the 14-day Relative Strength Index suggests that upward momentum is becoming mature.
• The 19-month high at 1.4299 presents the nearest resistance.

Trading near 1.4260 in Friday’s Asian session, USD/CAD is advancing for a fourth consecutive day. On the daily chart, however, the pair remains inside a rising wedge, a pattern signalling a bearish price breakdown and a possible turn lower.

With the exchange rate above both the nine-day and 50-day Exponential Moving Averages (EMAs), USD/CAD retains its bullish short-term outlook. Underlying demand is indicated by the grouping of short- and medium-term EMAs below the price. Meanwhile, the 14-day Relative Strength Index (RSI), at 67.2, sits just short of overbought territory, suggesting that upward momentum remains firm but is becoming mature.

Initial support is being tested near 1.4250, where the rising wedge’s lower boundary lies. Below that, USD/CAD faces the nine-day EMA at 1.4165 and the 50-day EMA at 1.4081. A move beneath these averages would exert downward pressure on the pair towards the area of 1.3732, the five-month low registered on 21 May.

On the upside, the first level USD/CAD may test is 1.4299, the 19-month high reached on 14 October. Beyond this lies the rising wedge’s upper boundary, near 1.4330.

BoC caution leaves US policy convergence on hold until 2025

Meaningful convergence between BoC and Fed policy settings is expected to be more likely in 2025 than during the rest of this year, in keeping with the BoC’s measured approach. NBC analysts note that “relatively contained underlying inflation should allow the BoC to proceed cautiously despite lingering energy-cost pressures,” supporting the view that any “sustained narrowing of the policy gap with the United States” will remain “largely a story for next year.”

(An AI tool assisted in preparing the technical analysis in this article. Learn more.)