Published: August 6th, 2026
The US dollar (USD) gained ground against the Canadian dollar (CAD) as the price reached a crucial support level. While soft US data and dwindling expectations of rapid Federal Reserve (Fed) rate increases are preventing the USD from rising further, the CAD is struggling as expectations of a settled agreement in Iran have led to a plunge in oil prices.
As the Brent crude oil barrel traded at three-week lows around $80, Canada's primary export, crude oil, accelerated its drop amid expectations that negotiations will resolve the US-Iran crisis. The positive Canadian goods trade surplus, which hit a record high in June, has been countered by the drop in oil prices.
Recent macroeconomic data in the US has dampened expectations that the Fed will tighten in the upcoming months. In June, JOLTS Job Openings declined more than anticipated, and Factory Orders fell short of projections. In light of this, the CME Group's FedWatch Tool data show that forecasts for a September rate hike have decreased to 58% from 67%.
Let's see further aspect of this pair from the USDCAD technical analysis:
In the daily chart of USDCAD, the recent price shows a bearish recovery after setting a top at the 1.4249 yearly high level. As the recent price is trading with counter-impulsive momentum, the primary anticipation for the pair would be to look for short trades only.
Despite the downside correction, the entire market structure is bullish, as shown on the monthly timeframe. The most recent candle closed as an inside bar, followed by two consecutive bullish candles. Moreover, the weekly timeframe suggests a pending downside correction, even if a new bullish break of structure is visible.
In terms of volume, the price has more room to form a bearish correction, even though the structure is above the high-volume line marked at the 1.3688 level. The gap between the current price and the high-volume line has expanded, creating room for a correction as the mean reversion.
On the other hand, the main chart suggests an overall bullish structure, with the 200-day SMA below the current price and working as crucial support. However, the recent price tried to overcome the 50-day EMA as support but failed to hold its momentum. As a result, the daily candle closed below the 50-day EMA, creating pressure on buyers.
The Relative Strength Index shows ongoing downside pressure, with the most recent line moving below the 50.0 neutral point and the possibility of testing the 30.00 oversold level. The strength of the trend remains questionable, as the Average Directional Index is hovering around the 22.00 level. This is a sign that the current bearish pressure may be a correction within the overall bullish structure, which could rebound at any time.
Based on the overall market structure, the grabbing of liquidity above the November 2025 high, along with the immediate bearish reversal signals, provides more room for the bearish correction to extend.
The downside pressure is running within a descending channel, where the most recent price has tested the channel resistance with a valid bearish recovery. This increases the possibility of maintaining the downside momentum and testing the 1.3925 Fibonacci extension level. On the bearish side, the ultimate target is to reach the 1.3799 support level before signaling a bullish rebound.
On the other hand, the overall structure is bullish, which could be a challenging factor for sellers. In that case, investors should closely monitor how the price reacts to the term support level, as the 1.3925 level is a crucial barrier for sellers. The 200-day SMA is still below the current price, and a rebound above the 50-day EMA could validate an immediate golden-cross continuation setup, where the ultimate target would be to test the 1.4249 level.
On the bullish side, any test of the term support level followed by a false break could provide additional confirmation of a bullish rebound, which could be validated by a breakout from the descending channel.
In the four-hour timeframe, the USDCAD price action is below the Ichimoku cloud resistance and is trading with corrective momentum. Primarily, it is a sign of a possible bearish continuation, but more confirmation is needed because the momentum is not solid.
In the future cloud, both lines are above the current price and showing downside traction, with a bearish crossover between the dynamic lines. However, the price is yet to make a significant low, which would validate the bearish trend from the current structure.
The MACD signal line is corrective, while the most recent reading is near the neutral point, with minor selling pressure visible in the histogram.
Based on this structure, the sideways market at the discounted zone, along with an immediate bullish recovery, could open a potential long opportunity at any time. In that case, a valid bullish four-hour candle above the 1.4081 swing high could increase the possibility of testing the 1.4246 double-top area.
On the other hand, the downside trend remains valid as long as the price remains below the cloud resistance, with the ultimate target being a test of the 1.3900 psychological level.
In the hourly timeframe, the current price is trading near the 1.3991 support level, from where bullish price action is visible. However, the entire structure remains below the dynamic resistance level, signaling a possible bearish rebound at any time.
The intraday high-volume line is at the 1.4045 level, which is an immediate barrier to monitor. The dynamic weekly VWAP and EMA are close to this resistance line and are acting as a barrier for buyers.
In the indicator window, the Traders Dynamic Index has rebounded from its previous position and is heading toward the upper band, signaling active buying pressure in the market.
Based on this outlook, the current structure is bullish, with the recent buying pressure leaving a double-bottom liquidity zone below the 1.3991 level. In that case, investors should closely monitor how the price retraces higher, as a valid rebound from the weekly VWAP resistance level could resume the bearish momentum at any time.
On the bearish side, the immediate support to monitor is the 1.3991 level. Below this line, the next support is located around the 1.3890–1.3911 area. On the bullish side, the recent rebound from the 1.3991 support is very crucial, as this level is considered strong intraday support. However, the price needs to overcome the 1.4045 resistance level for a stable trend shift to be considered.
A break above the 1.4079 resistance level could be a remarkable achievement and may provide the first sign of a daily bullish rebound.
Based on the overall structure, USDCAD is trading sideways after creating a new yearly high. Moreover, the price is trading at a crucial support level, from where a valid bearish break is pending to confirm downside continuation. Investors should closely monitor the intraday price action, as a valid rebound and recovery from the recent selling pressure could offer a bullish trend-trading opportunity.
