USD/CAD bids higher around 1.3820 during the early European session on Tuesday, followed by the immediate resistance region around 1.3850 lined up with the previous week’s high at 1.3854 level. The 14-day Relative Strength Index (RSI) is positioned above the 50 level, indicating upward support. This signals a bullish momentum and reflects a robust market sentiment. The Moving Average Convergence Divergence (MACD) line is situated above the centerline but shows convergence below the signal line, which suggests a potential momentum shift toward bearish sentiment in the USD/CAD pair.
Market participants adopt a cautious stance before US inflation data, higher than anticipated figures could boost the US Dollar (USD) and in return, the USD/CAD pair could revisit the yearly high at 1.3898 level. On the downside, the USD/CAD could meet the key support around the psychological level at 1.3800, followed by the 14-day Exponential Moving Average (EMA) at 1.3778. A decisive break below the latter could force the USD/CAD pair to navigate the region around the 23.6% Fibonacci retracement level at 1.3706 aligned to the 1.3700 significant level.
