USDCAD is currently trading around 1.4200 after a clean retest of a previously broken support zone, which has now turned into a strong resistance level. Price action is confirming the bearish structure as we see a gradual yet consistent drop from the highs of 1.4540. With the rejection seen from the supply zone and recent lower high formation, momentum is shifting further in favor of the sellers. I am now targeting 1.3800 for the next key level, aligning with both technical confluence and fundamental sentiment.
Technically, the structure is clear: we had a failed breakout above 1.4450, followed by a decisive bearish engulfing move. The market then completed a textbook retest at the 1.4340–1.4450 supply zone before resuming the downside move. The current formation on the 12H chart shows a lower low and lower high sequence intact, signaling a trend continuation to the downside. The highlighted zones also provide ideal reward-to-risk setups for continuation traders.
From a fundamental perspective, the Canadian dollar is gaining strength due to rising oil prices, with WTI crude now climbing back above the $85 mark. This directly supports the loonie given Canada’s oil-export-driven economy. Meanwhile, US economic uncertainty around upcoming CPI data and shifting Fed rate cut expectations continue to weigh on the dollar’s upside momentum. Additionally, recent risk-on sentiment in global markets is pushing flows into commodity-linked currencies like CAD.
With technicals and fundamentals aligning, I remain firmly bearish on USDCAD. As long as price remains below the 1.4340 resistance, I’m looking for continuation toward the major demand zone near 1.3830–1.3800. This setup offers a clean 1:3+ risk-to-reward profile, and I will be scaling in further on bearish confirmations as the market progresses.
Technically, the structure is clear: we had a failed breakout above 1.4450, followed by a decisive bearish engulfing move. The market then completed a textbook retest at the 1.4340–1.4450 supply zone before resuming the downside move. The current formation on the 12H chart shows a lower low and lower high sequence intact, signaling a trend continuation to the downside. The highlighted zones also provide ideal reward-to-risk setups for continuation traders.
From a fundamental perspective, the Canadian dollar is gaining strength due to rising oil prices, with WTI crude now climbing back above the $85 mark. This directly supports the loonie given Canada’s oil-export-driven economy. Meanwhile, US economic uncertainty around upcoming CPI data and shifting Fed rate cut expectations continue to weigh on the dollar’s upside momentum. Additionally, recent risk-on sentiment in global markets is pushing flows into commodity-linked currencies like CAD.
With technicals and fundamentals aligning, I remain firmly bearish on USDCAD. As long as price remains below the 1.4340 resistance, I’m looking for continuation toward the major demand zone near 1.3830–1.3800. This setup offers a clean 1:3+ risk-to-reward profile, and I will be scaling in further on bearish confirmations as the market progresses.
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Join our Forex Community Telegram group and connect with thousands of traders.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.