The Canadian dollar strengthened against the U.S. dollar today, pushing USD/CAD down to 1.39750 – a level that acted as resistance in early October but has since turned into support.
The pair’s fluctuations come amid a busy news backdrop. On Friday:
→ President Trump announced the suspension of trade talks with Canada, reportedly due to his dissatisfaction with Canadian advertising campaigns using Ronald Reagan’s image to criticise tariffs.
→ The CPI report came in weaker than expected. According to Forex Factory, U.S. annual inflation stood at 3.0%, compared with the 3.1% forecast by analysts.
This week could bring heightened volatility as markets await two key rate decisions on Wednesday:
→ At 16:45 GMT+3, the Bank of Canada is expected to cut its policy rate from 2.50% to 2.25%;
→ At 21:00 GMT+3, the Federal Reserve is forecast to lower the Federal Funds Rate from 4.25% to 4.0%.
Both announcements will be accompanied by policy statements that could significantly influence USD/CAD price action.
Technical Analysis: USD/CAD Chart
Last month’s analysis highlighted two key structures:
→ A red long-term descending channel originating in early February;
→ A blue ascending channel formed by price swings since mid-summer.
Since then:
→ Bulls managed to break above the red channel’s upper boundary;
→ The price consolidated around the median line of the blue channel in early October.
From a bearish perspective:
→ The price failed to hold above the psychological level of 1.4000;
→ A sequence of lower highs forms a descending trendline.
From a bullish perspective:
→ The blue channel remains intact;
→ 1.39750 serves as support;
→ An additional support zone lies just below, near the breakout point of the red channel where buying pressure was previously strong.
Given these factors, the red trendline may represent a corrective pattern within the broader bullish structure. Whether buyers can resume the uptrend successfully will largely depend on the upcoming central bank decisions and any further statements from President Trump.
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