USDCAD Outlook: Loonie Leverage as Greenback Falters

1. Summary

• Recent Action: USDCAD fell sharply to 1.3625–1.3640, breaching its April–May uptrend.
• Support: Strong near 1.3600; break below eyes 1.3550.
• Resistance: Capped near 1.3750–1.3770.
• Bias: Bearish short-term structure, especially under 1.3670.

2. Fundamental Factors

• USD Weakness:
  • U.S. GDP contracted (-0.5%) in Q1.
  • Trump's Powell comments shake Fed credibility.
  • DXY is weaker across the board (~10% YTD).
• Canada's Mixed Signals:
  • Retail sales plunged -1.1% (May) → fuels BoC rate cut speculation.
  • CPI is at 1.7%, and core inflation remains sticky, tempering expectations for immediate easing.

3. Key Takeaway for Traders

USDCAD is stuck in a tight 1.3600–1.3750 range, with downside pressure dominating U.S. dollar softness and weakening Canadian data.

• Bearish Scenario: A decisive break below 1.3600 opens room to 1.3550 and even 1.3480.
• Bullish Case: Only a strong USD bounce or hawkish Fed tone reclaims 1.3750+.

Watch for:

• Canadian GDP (next week),
• U.S. PCE inflation,
• BoC commentary for July rate clues.

USDCAD – H4 Timeframe

The above chart shows a bullish trade setup for USDCAD on the 4-hour timeframe chart. Price initially broke above the previous high of the downtrend (above the black trendline, too) and made a strong upward move, retracing back towards the key regions of the Fibonacci retracement tool—76% to 88%. I expect price to bounce from the demand zone near the 88% level and continue higher toward the previous high, around 1.3800.

Direction: Bullish

Target- 1.38046

Invalidation- 1.35276

CONCLUSION

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