USD/CAD (USDCAD) pair is showing good strength amid the strengthening dollar. The DXY index tracks US dollar in comparison to a bucket of other currencies. Since the start of February, DXY is up by almost 4%. While most forex pairs are sliding against the dollar, the Canadian dollar to US dollar exchange rate still remains strong.
On Friday, USDCAD experienced minor gains during the European session. At press time, the pair is trading at 0.1356 after gaining 0.14% in the day. The current price is also 2.3% up from the month lows of February 2023.
USD To CAD Takes a Bearish Start In 2023
Since the start of the year, foreign currencies are tanking in dollar value due to a high-interest rates in the US. Although the risk assets like equities rallied in January, they lost steam as the inflation data made Fed more hawkish. The USD/CAD pair also started the year with negative price action and fell by more than 2% in January.
However, the price has made a strong comeback and the pair is gaining strength in its dollar value. There appears to be a strong demand at 1.326 region as the price has bounced multiple times from this level. Most traders are awaiting today’s PCE inflation report before taking positions in the market.
USD/CAD Price Forecast – Near Term
On a higher timeframe, USD/CAD has been trading sideways since November. However, the pair has remained above the 200-day moving average even after multiple pullbacks. The price has also beautifully maintained the uptrend, as visible on the chart.
A closer look at the chart reveals that the 1.37 level is acting as a very strong resistance. It was retested in December by USDCAD got an intense rejection. Considering the pairs strength, in the coming days I expect the price to retest the 1.37 level once again. A breakout above this level will result in another upside push till the last-year high of 1.397. This will be a 3% price increase from current level.