01.05.202010:41 Forex Analysis & Reviews: USD/CAD - USD gaining momentum

The US dollar has accelerated its growth versus the Loonie. USD/CAD is trading at 1.4032 level despite the fact that the US dollar index plunged in the short term. The pair has reached a resistance zone. That's why we have to wait for a valid breakout to be sure that the pair will resume the upside movement.

The USDX has dropped like a rock after the FOMC Meeting. The Fed kept the interest rate unchanged but Powell said that that the regulator would use all available tools to combat the COVID-19 crisis. Maybe traders were disappointed because the Fed announced that it would keep the rate low until the economy recovered.

USD/CAD is pressuring the upper median line (UML) of the black descending pitchfork, a valid breakout will validate a further increase. The pair found strong support at the Daily S2 (1.3854) level. It failed to fix below the median line (ML). So, the current rebound and increase towards the upper median line (UML) is natural.

The price ignored the S1 (1.3973) level, so it could approach the Pivot Point (1.4118) in the short term. USD/CAD moves sideways between the 1.3854 (S2) level and the 23.6% Fibonacci level. It could try to come back towards the upside line of this extended sideways movement if the USDX manages to rebound.

The Loonie dropped as the Canadian GDP increased only by 0.0%, below the 0.2% estimates. It remains to be seen how the pair will react today after the US ISM Manufacturing PMI will be released. Some good numbers from the US could send the USD/CAD a way higher.

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USD/CAD has rallied and reached a strong resistance. A false breakout with a great separation or a bearish engulfing will signal a drop in the short term. The support remains at the S2 (1.3854) and at the median line (ML).

USD/CAD could increase if it closes above the upper median line (UML) and above the 38.2% level. The upside targets are seen at the PP (1.4118) and at the R1 (1.4238) level.