18 Feb 2025

USD/CAD is gaining momentum, trading around 1.4205 during the early European session on Tuesday. The pair maintains a bearish outlook as it remains below the 100-period Exponential Moving Average (EMA), accompanied by a declining Relative Strength Index (RSI). The primary downside target to monitor is 1.4151, while immediate resistance is identified near 1.4265.

During this early session, the USD/CAD pair is positioned in positive territory at approximately 1.4205, buoyed by a stronger U.S. dollar. Later on Tuesday, attention will turn to the Canadian Consumer Price Index (CPI) inflation data for January.

The headline CPI is anticipated to reflect a year-over-year increase of 1.8% for January. Month-over-month, CPI inflation is expected to rise to 0.1% in January, recovering from a decline of 0.4% in December.

Analysis of the 4-hour chart indicates that the bearish sentiment for USD/CAD remains intact, as the pair trades below the significant 100-period EMA. This downward trend is further supported by the RSI, which is positioned below the midline at approximately 46.25, favoring sellers in the short term.

The initial support level for the pair is identified at 1.4151, corresponding to the low recorded on February 14. Should selling pressure persist below this level, a decline to 1.4130, the lower boundary of the Bollinger Band, may occur. Further down, the next significant support level to observe is the psychological mark of 1.4100.

On the upside, the first resistance level is located near 1.4265, which represents the upper boundary of the Bollinger Band. A decisive breakthrough above this level could lead to a rise towards 1.4310, aligning with the 100-period EMA. Continued upward movement may target the next resistance at 1.4380, the peak observed on February 10.