Forex Watchlist: USD/CAD’s Make Or Break Consolidation


 USD/CAD made lowkey higher highs and higher lows in 2022 after bouncing from its 1.2050 lows in 2021.

But have the bulls run out of steam?

USD/CAD is still making higher lows, but its lower highs have locked the pair inside a symmetrical triangle pattern on the daily time frame.

More importantly, USD/CAD made the consolidation pattern just as it hit the middle of its years-long range.

Will the consolidation’s breakout also hint at USD/CAD’s next direction?

USD/CAD: Daily

The odds currently favor the U.S. dollar thanks to the 100 and 200 SMAs supporting an uptrend. Stochastic is also on the bulls’ side as it hangs around the oversold zone on the daily.

Let’s see if fundamentals support further USD buying.

The safe-haven dollar is gaining ground again after major data releases from the U.S. and around the world are bringing back risk aversion in the markets.

It also doesn’t help USD bears that Fed members are regularly reaffirming their hawkish biases.

Meanwhile, traders believe that the Bank of Canada (BOC) is nearly finished with its interest rate hikes.

Unless we see fresh catalysts, the disparity between the Fed and BOC’s interest rate expectations could extend USD/CAD’s uptrend.

USD/CAD could find support from the SMAs and the triangle’s trend line and revisit major areas of interest like 1.3700 and 1.4000.

But if USD bears manage to extend their run in the next few weeks, then USD/CAD could break below its consolidation.

Don’t discount a downside breakout that could drag USD/CAD to its 1.3200 or 1.2950 previous inflection points!