USDCAD closed Wednesday at 1.3848, marking a 52-pip climb from Monday's 1.3797 open. The pair has carved out a range between 1.3797 and 1.3854 through the first three sessions, with buyers maintaining control above 1.3800.
Dollar strength across the board pushed USDCAD higher early in the week, with the PBOC's weaker-than-expected yuan fixing adding fuel to broad USD bids. The central bank's move signaled tolerance for yuan weakness that spilled into commodity currencies including the Canadian dollar.
The back half of this week arrives without major scheduled releases for either currency, leaving USDCAD to trade on broader dollar flows. If risk sentiment deteriorates further amid the yuan weakness, 1.3900 becomes the obvious test. Should oil catch a bid or USD momentum stall, the 1.3800 support comes back into focus.
LHFX client sentiment shows 51% of positions are long and 49% short as of Wednesday morning. This near-perfect balance reflects the market's indecision at current levels, with neither bulls nor bears commanding a clear majority midweek.
The 1.3850 area stands as the immediate pivot, sitting just above Wednesday's close and near the week's high at 1.3854. If price clears and holds above this resistance, the psychological 1.3900 level becomes the next test. A rejection here would put 1.3800 back on the table, where Monday's open provided the week's floor.
Byline: LHFX Research
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