Chart: Make or break support zone for USD/CAD

USD/CAD appears red candlesticks just below a key technical support area!

Are we looking at an eruption in the making?

Or are the dollar bulls about to come in and say, “Not today, bears!”?

USD/CAD Daily Forex Chart from TradingView

The US dollar fell badly in August, thanks to the release of US data and speeches by FOMC members supporting expectations of a Fed rate cut by September.

However, at least some traders are now taking weak US economic reports and reading “slower global growth” and reduced risk appetite. The Canadian dollar, in particular, may struggle to find new bullish momentum after Canada just released cooler-than-expected and tame inflation numbers in July.

Remember that directional biases and market price volatility conditions are usually driven by fundamentals. If you haven’t done your US and Canadian dollar homework yet, then it’s time to check the economic calendar and keep up with the daily fundamental news!

Can USD/CAD sustain its decline long enough to force a bear breakout?

USD/CAD, which is already flirting with the psychological level of 1.3600, is also testing the 200 SMA of the daily chart and the bottom of a range that has not been invalidated since April this year.

If USD/CAD sees more bearish candlesticks below 1.3600, then the pair could attract enough sellers to pull it down to the 1.3520 inflection point of the S2 line (1.3471) Pivot Point.

But if USD/CAD shows long wicks and starts seeing green candlesticks above the 1.3600 support, then the pair may attract buyers looking to buy USD/CAD at cheaper prices.

USD/CAD could see enough bullish pressure to retest the 1.3700 psychological handle or the 1.3750 average area near the Pivot Point line.

Keep an eye on the latest market headlines so you don’t miss potential catalysts that can make or break USD/CAD’s long-term range!