Over the past 24 to 48 hours, the USD/CAD exchange rate has seen some volatility with a slight decline, closing yesterday at around 1.40445. The market’s movement has been mainly influenced by stronger-than-expected Canadian GDP growth and fluctuating oil prices. Against the backdrop of the Federal Reserve maintaining a hawkish stance and rising oil prices, the Canadian dollar faced pressure, supporting the US dollar and causing the USD/CAD pair to trend upwards recently, though resistance has intensified near key levels, resulting in active trading between 1.38 and 1.41.

Recent market news highlights that despite Canada’s robust economic data which normally would support the Loonie, sliding oil prices and investor expectations of continued US rate hikes have kept the US dollar firm. This dynamic led to USD/CAD experiencing both retracements and rebounds over the last two days. Analysts at Scotiabank have also cautioned that the USD/CAD rally may be overextended, signaling potential correction risks ahead.

For the average investor, this means the USD/CAD currency pairing remains uncertain, resembling a tug-of-war between two fundamental forces. If you are a cross-border buyer or traveler, expect short-term volatility impacting your costs or travel budgets. Keeping an eye on Canadian economic releases and Federal Reserve policy updates will be crucial for managing risks and timing entries or exits effectively.

Daily Chart

The USDCAD daily chart reveals a broad consolidation between 1.38 and 1.42 since early this year. Recent price action has hovered near 1.40, with the 200-day moving average around 1.38 acting as strong long-term support, and the 50-day moving average at about 1.41 providing resistance. Bollinger Bands are contracting, signaling reduced volatility, while the MACD remains positive, favoring a bullish longer-term trend. Overall, the pair is testing key resistance near 1.41 but remains cautiously bullish within this range.

1H Chart

The hourly chart from the past 3-5 days shows a descending wedge formation, with prices approaching short-term support near 1.3850. Short-term moving averages are slightly bearish, and MACD histogram is shrinking close to the zero line, indicating weakened momentum and potential sideways movement. The critical question is whether the pair can hold above 1.3850 to trigger a short-term rebound or if further downside testing is likely.

Technical Trend:  Currently, USDCAD is in a cautiously consolidating phase.

Technically, USDCAD’s descending wedge hints at a potential reversal, but confirmation at the 1.3850 support level is essential. A recent hammer candlestick signals strong buying interest at this area, suggesting a possible short-term bounce. The MACD shows no clear divergence, RSI remains neutral, and volumes are subdued, indicating the trend is uncertain but range-bound for now. Close observation of volume and momentum signals is key for spotting high-probability trade setups.

Today’s economic calendar in GMT+1 includes key Canadian Trade Balance and Manufacturing PMI data at 14:30 and 15:30 respectively. Trade Balance is forecast to decline from 4.24bn CAD to 3.1bn CAD, with PMI also expected to soften from 53 to 50.5. Subpar readings could weigh on the Canadian dollar, pushing USD/CAD higher. Additionally, several US economic releases, including Durable Goods Orders and Factory Orders, are scheduled, potentially influencing the US dollar trend. Collectively, these events could add volatility to USDCAD, so traders should remain alert.

Resistance & Support

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