In today’s technical analysis, let’s take a closer look at the American dollar to Canadian dollar (USD/CAD), which is currently testing a crucial horizontal support zone — a level that has repeatedly proven its importance over recent weeks. This area, sitting just above 1.3980 and marked with orange color on the chart, represents the lows from last week, as well as the base of the most recent bearish correction. This means that the price action we are seeing right now could determine whether the broader bullish structure will continue or if the market will transition into a deeper correction.
From the broader perspective, USD/CAD remains in a clear uptrend. The pair has been forming a consistent pattern of higher highs and higher lows, showing steady demand for the US dollar against the Canadian dollar. The correction we are witnessing now is technically normal within the context of an ongoing bullish trend — and as long as the price holds above the orange horizontal support, the structure remains intact. In fact, this level was previously a key resistance in early October, before being broken to the upside. After the breakout, it successfully transformed into a support zone, confirming its technical strength.
The most recent price action supports this view — last week’s bounce from 1.3980 was followed by another bullish reaction on Monday, reinforcing the notion that buyers are defending this area. As long as the pair stays above this support, the sentiment remains positive, and the market should continue aiming for higher targets, potentially retesting October’s highs. On the other hand, a daily close below 1.3980 would be a negative technical development, likely triggering a deeper pullback toward the next support zone. For now, however, the trend remains bullish, and buyers are still in control.