USDCAD Rebounds as Buyers Counter Previous Declines

The USDCAD is moving higher today, reversing the declines from both yesterday and Wednesday. Recall that yesterday's weakness came as the U.S. dollar sold off broadly in sympathy with the sharp decline in USDJPY amid intervention speculation. That selling pressure came despite Treasury yields moving higher following the FOMC decision. Today, yields are climbing again, with the 2-year Treasury yield up 6.2 basis points and the 10-year yield higher by 6.7 basis points. This time, the U.S. dollar is responding to the rise in yields, and the USDCAD is participating in the move.

From a technical perspective, yesterday's decline brought the pair within striking distance of the 38.2% retracement of the rally from the early May low. The price bottomed at 1.3990, just 9 pips above the retracement target at 1.39812. The inability to reach, let alone break, that key Fibonacci level was a disappointment for sellers looking to gain stronger control. Until that level is broken, the recent decline remains a normal correction within what has been the broader bullish trend.

Today's rebound has lifted the pair to 1.4057, leaving it just 14 pips below the falling 100-hour moving average at 1.4071. The 200-hour moving average sits just above at 1.4078, creating an important resistance zone. For buyers to take back control, they need to push the price above both moving averages and, just as importantly, keep it there. A sustained move above those levels would shift the technical bias back to the upside and have traders targeting this week's high near 1.4130. That level also marks the bottom of a key floor/ceiling zone between 1.41297 and 1.41488. Earlier this week, the pair failed against that resistance, giving sellers the green light to rotate lower.

For sellers, there is still work to do. They need to force the price back below the recent lows at 1.4003 and 1.3990 and, ultimately, break below the 38.2% retracement at 1.39812. Until that happens, the broader technical advantage remains tilted toward the buyers despite this week's corrective decline.