The USD/CAD currency pair continues to trade within a narrow range, maintaining levels above the weekly low of 1.3900. Despite the recent rebound from earlier this month, the pair’s ability to sustain upward momentum may be limited due to the ongoing pressure from the negatively sloped 50-day Simple Moving Average (SMA) at 1.4083.
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US Retail Sales Surprise Fuels Short-Term Upside
A modest but unexpected 0.1% increase in U.S. Retail Sales helped push USD/CAD to a fresh session high of 1.4004. This move suggests a potential shift in U.S. dollar sentiment, prompting speculation that the pair could break out of its recent sideways trend.
As U.S. economic data surprises to the upside and the threat of a trade war under the Trump administration seems to fade, broader U.S. dollar strength may continue to influence USD/CAD in the near term.
Policy Shifts and the Fed’s Stance Remain Key Drivers
U.S. fiscal policy remains in focus as the government enacts changes across trade, immigration, and regulation. The Federal Reserve, meanwhile, appears content to hold interest rates steady, with little immediate pressure to pivot toward rate cuts. This stable backdrop supports the recent U.S. dollar rebound and could help USD/CAD retrace more of its decline from the April high of 1.4415.
Price Action: Will the 50-Day SMA Cap Upside Momentum?
USD/CAD’s technical setup shows the pair coiling above 1.3900, but resistance remains formidable. The 50-day SMA at 1.4083 continues to slope downward, potentially acting as a ceiling if bulls fail to generate fresh momentum.
A daily close above the 1.3940 to 1.4000 zone—defined by key Fibonacci levels—could open the door for a retest of the 1.4110 area, aligning with the 50% Fibonacci retracement.
USD/CAD Sentiment Toward Canadian Dollar Turns Bearish
Canadian Dollar Rises as Investors U.S. Federal Reserve Cuts Rates
Canadian Dollar Struggles as USD/CAD Rises to 1.4260
Canadian Dollar Falls to 3-Week Low as Hopes for Tariff Relief Diminish
Will the Canadian Dollar Strengthen or Weaken in 2025? Key Economic and Political Factors to Watch
Key Technical Zones to Watch
Upside Targets
- 1.3940–1.4000: Consolidation zone with overlapping Fibonacci retracement and extension levels
- 1.4110: 50% Fibonacci retracement level; breakout above this could signal further strength
- 1.4210–1.4270: Next key resistance range, combining the 78.6% Fibonacci extension and 38.2% retracement
Downside Risks
- 1.3900: Current weekly low and short-term support
- 1.3850: Break below this 50% Fibonacci extension may expose deeper weakness
- 1.3751: Monthly low becomes a potential target if bearish momentum accelerates
Conclusion: Watching for a Breakout or Breakdown
USD/CAD remains in consolidation, but the clock may be ticking on this sideways price action. A break above 1.4000 would hint at renewed bullish momentum, especially if supported by U.S. economic data and policy stability. On the other hand, failure to hold above 1.3900 could send the pair revisiting deeper support levels.
Traders should stay alert to technical signals and fundamental headlines, as either could act as a catalyst for the next major move in USD/CAD.