FX.co ★ USD/CAD

USD/CAD falls after yesterday's gains as the pair trades near 1.3970 in Europe on Tuesday. Technical analysis of the daily chart indicates the pair is approaching the upper resistance line of a falling wedge pattern, suggesting the market is at an important inflection point where a bullish breakout is likely. However, the pair failed to break above the wedge, suggesting sellers are currently defending the upper resistance level. The USD/CAD currency pair maintains a bearish short-term outlook, as price is currently trading below the 9- and 50-period EMAs. The pair has corrected lower from recent highs and is trading below the two trend lines, while the 14-day RSI at 37 reflects declining bearish pressure. On the downside, USD/CAD is expected to decline toward the first support level at the lower end of the falling wedge, around 1.3900. A break below the falling wedge may add selling pressure and push the pair toward the five-month low of 1.3732, hit on May 21, followed by 1.3481, the lowest since October 2024. On the positive side, USD/CAD is expected to bounce back and test the first resistance level at the upper side of the falling wedge around 1.3990, followed by the 9- and 50-day EMAs at 1.4010 and 1.4051, respectively. Breaking above this convergence resistance area would trigger a bullish reversal and push the pair toward an 18-month high of 1.4299, hit on October 14. According to experts at Standard Chartered, "the BoC increased the interest rate by 0.25% to 2.5% at their October 28 meeting. We had expected a pause." Indeed, although "consensus anticipated an increase," many people viewed "this kind of action as unnecessary due to low core inflation and weak growth." To these analysts, the BoC's decision confirms its "high preference for preemptive increases to meet inflationary risks." In its analysis, Scotiabank cites comments from Governor Tiff Macklem that reinforced that message. Indeed, according to this bank, "statements from BoC Governor Macklem as published on Bloomberg late on Wednesday provided an increasingly hawkish read of his remarks relative to the statement and press conference, which had been slightly more restrained."