After an aggressive correction from the 1.3920 highs, USD/CAD has now landed on a heavy demand zone near 1.3720 – 1.3740. This area has proven to be a launchpad for rallies in recent weeks, and price is once again testing buyers’ conviction. With both technical structure and macro fundamentals in play, this zone could determine the next major swing.
Current Bias
Bullish bias as long as 1.3720 holds, with upside potential toward 1.3818 and 1.3920 supply.
Key Fundamental Drivers
USD: Supported by sticky inflation (Core PCE 2.9% y/y) and resilient consumer spending (+0.5% m/m). Fed rate cut expectations have softened, keeping the dollar supported.
CAD: Weighed down by weaker Canadian GDP (Q2 annualized -1.6%, q/q -0.4%) and slowing momentum in domestic growth. Oil remains weak near $64, offering little support to the loonie.
Macro Context
Rates: The Fed remains cautious with cuts, while the BoC faces pressure from economic contraction. Interest rate divergence favors the USD.
Growth Trends: US growth remains firmer compared to Canada’s slowdown.
Commodities: Oil’s weakness is a drag on CAD, making the currency vulnerable.
Geopolitics: Ongoing tariff disputes and Middle East energy risks keep USD demand steady as a safe haven, further weighing on CAD.
Primary Risk to the Trend
A deeper selloff in USD on unexpected Fed dovishness or a sharp rebound in oil prices (driven by geopolitical shocks or supply cuts) could strengthen CAD and invalidate the bullish setup.
Most Critical Upcoming News/Event
US ISM PMI & NFP (this week): Key drivers for Fed policy path.
Canada Jobs Report (Friday): Critical for CAD sentiment after the weak GDP print.
Leader/Lagger Dynamics
USD/CAD tends to lag oil and broader USD moves. It often follows the dollar’s momentum, while oil price shocks can lead moves on CAD. Currently, the pair is USD-led, making it more reactive to Fed data than Canadian domestic flows.
Key Levels
Support Levels: 1.3720 – 1.3740 (demand zone), 1.3660.
Resistance Levels: 1.3818 (mid-resistance), 1.3918 – 1.3925 (major supply).
Stop Loss (SL): 1.3650 (below demand zone invalidation).
Take Profit (TP): 1.3818 (first target), 1.3920 (extended target).
Summary: Bias and Watchpoints
USD/CAD is sitting at a key demand zone around 1.3720 – 1.3740, where buyers need to defend the trend. The bias remains bullish above this level, with upside targets at 1.3818 and 1.3920. A break below 1.3650 would invalidate the long setup and expose further downside. With US data in focus and CAD weighed down by weak GDP and soft oil prices, the pair is more likely to follow USD momentum in the near term. Traders should watch NFP and Canada’s jobs data closely, as these will dictate whether this bounce carries to new highs or fades into deeper consolidation.
Current Bias
Bullish bias as long as 1.3720 holds, with upside potential toward 1.3818 and 1.3920 supply.
Key Fundamental Drivers
USD: Supported by sticky inflation (Core PCE 2.9% y/y) and resilient consumer spending (+0.5% m/m). Fed rate cut expectations have softened, keeping the dollar supported.
CAD: Weighed down by weaker Canadian GDP (Q2 annualized -1.6%, q/q -0.4%) and slowing momentum in domestic growth. Oil remains weak near $64, offering little support to the loonie.
Macro Context
Rates: The Fed remains cautious with cuts, while the BoC faces pressure from economic contraction. Interest rate divergence favors the USD.
Growth Trends: US growth remains firmer compared to Canada’s slowdown.
Commodities: Oil’s weakness is a drag on CAD, making the currency vulnerable.
Geopolitics: Ongoing tariff disputes and Middle East energy risks keep USD demand steady as a safe haven, further weighing on CAD.
Primary Risk to the Trend
A deeper selloff in USD on unexpected Fed dovishness or a sharp rebound in oil prices (driven by geopolitical shocks or supply cuts) could strengthen CAD and invalidate the bullish setup.
Most Critical Upcoming News/Event
US ISM PMI & NFP (this week): Key drivers for Fed policy path.
Canada Jobs Report (Friday): Critical for CAD sentiment after the weak GDP print.
Leader/Lagger Dynamics
USD/CAD tends to lag oil and broader USD moves. It often follows the dollar’s momentum, while oil price shocks can lead moves on CAD. Currently, the pair is USD-led, making it more reactive to Fed data than Canadian domestic flows.
Key Levels
Support Levels: 1.3720 – 1.3740 (demand zone), 1.3660.
Resistance Levels: 1.3818 (mid-resistance), 1.3918 – 1.3925 (major supply).
Stop Loss (SL): 1.3650 (below demand zone invalidation).
Take Profit (TP): 1.3818 (first target), 1.3920 (extended target).
Summary: Bias and Watchpoints
USD/CAD is sitting at a key demand zone around 1.3720 – 1.3740, where buyers need to defend the trend. The bias remains bullish above this level, with upside targets at 1.3818 and 1.3920. A break below 1.3650 would invalidate the long setup and expose further downside. With US data in focus and CAD weighed down by weak GDP and soft oil prices, the pair is more likely to follow USD momentum in the near term. Traders should watch NFP and Canada’s jobs data closely, as these will dictate whether this bounce carries to new highs or fades into deeper consolidation.
Trade closed: target reached
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✅ 85% Accuracy | 1–2 Signals/Day
💰 Profitable Trades Sent Daily – No Cost
📲 Join Us on Telegram
t.me/ultreos_forex
🎯 Upgrade to VIP:
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.