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
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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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