USD/CAD looks to have paused its downswing after testing key support levels.
Could this be the springboard for a bounce in the coming days?
Here’s the 4-hour chart we’re watching!
USD/CAD 4-hour Forex Chart by TradingView
USD/CAD has been trending lower since last week, as rising expectations for a Fed rate cut have dragged the dollar down, despite some safe-haven demand offering limited support.
At the same time, stronger-than-expected Canadian CPI reports cooled expectations for a Bank of Canada rate cut. That helped lift the Loonie, even with global trade jitters and softer oil prices in the mix.
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on the Canadian dollar and the U.S. dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
Is USD/CAD done with its downswing? The pair turned lower from the 1.3750 area and is now hovering near the 1.3600 psychological level that may be the bottom of a triangle pattern.
That zone lines up with the S2 Pivot Point at 1.3616 and a trend line support that’s held since mid-June.
Keep an eye out for bullish candles and a solid hold above 1.3600. That could open the door for a bounce toward the S1 zone at 1.3668 or even the 1.3721 Pivot Point.
But if we see more red and a clean break below 1.3600, the pair could stay on its downtrend path. Sellers might aim for the 1.3550 lows or take a shot at fresh 2025 lows.
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment.
Disclaimer:
Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.
