Is the USDCAD Moving into Bearish Territory?

The USDCAD currency pair faced a downturn last week, closing 16 basis points lower and ending two consecutive weeks of gains. This decline underscores the prevailing bearish sentiment, with the pair trading 52 basis points lower in the current week.  

Selling pressures intensified following higher-than-expected Canadian inflation, bolstering the Canadian Dollar, while the U.S. Dollar retreated amidst diminished safe-haven demand. Assurances from Iran regarding no retaliatory action against Israel further dampened the Greenback, compounded by sluggishness in the U.S. manufacturing and services sectors, fuelling expectations for interest rate cuts.  

Notably, the USDCAD pair has witnessed five consecutive days in the red, reflecting market dynamics and sentiment. Moving forward, traders are eyeing the Fed’s preferred consumer inflation measure, the PCE Price Index, as a potential catalyst influencing the pair’s trajectory, highlighting the significance of upcoming economic data releases in shaping market movements and trading opportunities. 


The USDCAD pair has been navigating an uptrend, maintaining a position above the 100-day moving average.  

Initially propelled higher by U.S. Dollar strength, the pair found support at the 1.34778 level. However, as it approached the 1.38461 level, a resistance level formed amidst overbought RSI conditions, triggering a downturn.  

Currently, the pair has retraced towards the 50% Fibonacci Retracement level, indicating a potential pivot point. If selling pressures persist, the 61.80% Golden Ratio may attract attention as a point of interest for traders. Conversely, if the 50% level holds as intermediate support, a rebound could occur, leading to a retest of the 1.38461 resistance level. This price action reflects the delicate balance between bullish and bearish forces in the market, with traders closely monitoring key technical levels for insights into future price movements and trading opportunities. 

USDCAD Technical Analysis Graph


With the USDCAD pair experiencing a downturn amidst intensified selling pressures, the trajectory appears to lean towards bearish territory. Key technical levels, including the 50% Fibonacci Retracement and 1.38461 resistance levels, will be pivotal in determining future price movements and trading opportunities. Investors remain watchful for market cues. 

Sources: Statistics Canada, Reuters, TradingView 

Piece Written By Nkosilathi Dube, Trive Financial Market Analyst 

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