USDCAD stalls at 100-day moving average as sellers push back

USDCAD is trading lower on the day, though it stays within a range defined by significant moving averages amid ongoing competition between bulls and bears.

Last Friday, the pair found support around the area where the 200-hour and 200-day moving averages converge, just before Fed Chair Kevin Warsh delivered a more hawkish speech at Jackson Hole. The resulting increase in US yields pushed the US dollar significantly higher, lifting USDCAD along with it.

The advance took USDCAD from the support zone of the lower moving averages up to the 100-day moving average. During early trade on Tuesday, the pair reached a fresh peak of 1.3911, roughly four pips below the 100-day moving average at 1.3915.

Traders sold into that important technical resistance, driving the pair lower. Just as last week saw buyers step in around the 200-day moving average, sellers have now intervened at the 100-day moving average.

The pullback has brought the pair into a support zone spanning 1.3867 to 1.3882. This zone comprises:

• A swing area
• The rising 100-hour moving average near 1.3868
• The 38.2% retracement at 1.3882

Should buyers defend that support cluster and drive prices up, the 100-day moving average around 1.3915 stays the primary upside objective. A move above and sustained trading beyond that level would strengthen the bullish case and pave the way for further gains.

On the other hand, a decisive drop under the 100-hour moving average would damage the near-term technical outlook, redirecting attention to the area where the 200-hour and 200-day moving averages converge around 1.3848.

Currently, USDCAD is trapped between moving-average resistance overhead and moving-average support underneath. The next directional move is expected to clarify which side gains the upper hand.