Summary
USDCAD is hovering near the 1.3680–1.3700 zone, testing a key support area after breaking below its April–May descending channel. Momentum indicators show a bearish tilt, but bulls may defend 1.3650 in the short term. Resistance sits at 1.3750–1.3770, and a reclaim above this zone could invalidate the bearish structure and open room for 1.3850.
Macro Landscape
- Canadian Growth Fears: A projected 1.1% drop in May retail sales signals Q2 stagnation risks, reinforcing bets for two 25bp BoC cuts in H2.
- Sticky Core Inflation: Despite April headline CPI at 1.7%, core inflation >3% suggests the BoC may tread carefully, limiting aggressive dovish pivots.
- Oil & Yield Drivers: With WTI near $75, oil lends modest CAD support, though narrowing Canada–U.S. 10Y spreads and cautious global sentiment keep USD demand elevated.
Outlook & Strategy
The bias remains bearish below 1.3700, with a clean break of 1.3650, exposing 1.3600 and potentially 1.3550. However, any hawkish BoC tone or rebound in oil could spark CAD strength. Conversely, stronger U.S. CPI or jobs data could bolster the dollar and flip momentum.
Watch This Week:
- BoC Commentary (June 4)
- U.S. CPI + NFP
- Oil inventories & price reaction
- Middle East headlines impacting safe-haven flows
USDCAD – H4 Timeframe
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The price action on the 4-hour timeframe chart of USDCAD shows a bearish structure based on the consistent formation of lower highs and lower lows. Currently, price has reached a critical area of supply overlapping the 88% Fibonacci retracement level, hinting at a bearish outcome in the near term. The resistance trendline is another crucial factor in favor of the bearish continuation.
Direction: Bearish
Target- 1.36142
Invalidation- 1.38942
CONCLUSION
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