USDCAD is still trending higher, moving above an ascending trend line visible on its 4-hour time frame. 

Price is stalling around the 1.3100 handle and looks prime for a pullback to the uptrend line.

Using the Fib tool on the latest swing low and high shows that the 38.2% level lines up with the rising support zone around the 1.3000 major psychological mark. The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside, which means that the rally is more likely to resume than to reverse.

Stochastic is indicating overbought conditions and is turning lower to reflect a return in selling pressure. A larger correction could also find support at the 50% Fib, which is close to a former resistance area.

There were no reports out of the US economy on Monday as traders are pricing in expectations for the FOMC decision later this week. A 0.25% interest rate hike is widely expected and even more hawkish hints could lift the US currency.

Meanwhile, the Loonie appears to be taking its cue from NAFTA updates and trade war fears. Oil has been slightly higher but the positively-correlated currency has failed to follow suit. Canadian retail sales and CPI figures are due on Friday.

By Kate Curtis from Trader’s Way