USDCAD Technical Analysis – The Loonie remains at the mercy of tariffs headlines

Fundamental Overview

The USD has come under strong pressure recently as the weaker US data finally triggered a deeper pullback in the greenback from the stretched long positions accumulated in the past two quarters. The market pricing switched pretty fast from expecting just one cut a couple of weeks ago to three now.

The main event this week is the US CPI report. Higher than expected data will likely give the greenback a boost in the short term as markets pare back their rate cuts expectations. Conversely, a soft report could see more weakness for the US Dollar ahead of the FOMC decision next week.

On the CAD side, the negative sentiment and the tariffs risk isn’t helping the Loonie as it continues to underperform with the markets now expecting a rate cut at this week's BoC decision due the potential hit to the Canadian economy.

USDCAD Technical Analysis – Daily Timeframe

On the daily chart, we can see that USDCAD continues to mostly range between the 1.42 and 1.45 levels as the uncertainty around tariffs remains high. There’s not much we can glean from this timeframe, so we need to zoom in to see some more details.

USDCAD Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the price recently broke below the upward trendline and extended the drop into the 1.4245 level before bouncing off of it and rallying back above the key 1.4374 level. The price action remains choppy and the market is at the mercy of the tariffs headlines.

USDCAD Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we have a minor upward trendline defining the bullish momentum on this timeframe. The buyers will likely step in around these levels with a defined risk below the trendline to position for further upside. The sellers, on the other hand, will look for a break below the trendline to pile in for a drop back into the 1.4245 level next. The red lines define the average daily range for today.

Upcoming Catalysts

Today we have the NYFed Consumer Inflation Expectations. Tomorrow, we get the US Job Openings data. On Wednesday, we have the US CPI report and the BoC Rate Decision. On Thursday, we get the US PPI data and the US Jobless Claims figures. On Friday, we conclude the week with the University of Michigan Consumer Sentiment report.