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USD/CAD Eyes Additional Gains, Fed Slashes Rates By 0.5%

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Aayush Jindal

Key Highlights

  • USD/CAD started a decent increase above the 1.3500 resistance.
  • A key bullish trend line is forming with support at 1.3550 on the 4-hour chart.
  • GBP/USD remained in a bullish zone above the 1.3150 level.
  • The Fed reduced interest rates from 5.50% to 5.00%.

USD/CAD Technical Analysis

The US Dollar found support near the 1.3440 zone against the Canadian Dollar. USD/USD started a decent increase above the 1.3500 resistance zone.

Looking at the 4-hour chart, the pair climbed above the 23.6% Fib retracement level of the downward move from the 1.3946 swing high to the 1.3437 low. The pair even cleared the 100 simple moving average (red, 4-hour), but it stayed below the 200 simple moving average (green, 4-hour).

It seems like the pair is now facing hurdles near 1.3620, the 200 simple moving average (green, 4-hour), and the 38.2% Fib retracement level of the downward move from the 1.3946 swing high to the 1.3437 low.

A clear move above the 1.3620 zone might set the pace for a move toward 1.3700. Any more gains might call for a test of the 1.3750 zone.

On the downside, immediate support sits near the 1.3550 level. There is also a key bullish trend line forming with support at 1.3550 on the same chart, below which the pair might test the 100 simple moving average (red, 4-hour).

The next key support sits near the 1.3500 level, below which the pair could dive toward the 1.3440 support zone or the last swing low.

Looking at GBP/USD, the pair remained stable above 1.3150, spiked higher after the UK CPI release, and might aim for more upsides in the near term.

Upcoming Economic Events:

  • US Existing Home Sales for August 2024 (MoM) - Forecast -0.1%, versus +1.3% previous.
  • US Initial Jobless Claims - Forecast 230K, versus 230K previous.
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