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USD/CAD Forecast: Bearish Momentum Continues Below 1.3750 on Dovish Fed and Geopolitical Quietness

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  • June 24, 2025
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USD/CAD currency pair remains in a bearish tendency, trading close to 1.3720 during early European trading on Tuesday. The downward trend is fueled by a weaker US Dollar, under pressure due to a truce between Iran and Israel as well as dovish utterances from the US Federal Reserve, with Fed Governor Michelle Bowman suggesting that the Federal Reserve might cut interest rates in July. Technically, the pair is still below the 100-day EMA and bears bearish momentum with the RSI in the low zone. Critical support is at 1.3635, while resistance is at 1.3820, maintaining the bearish outlook in place unless a decisive breakout above key resistance levels. KEY LOOKOUTS • A break below this level may trigger further decline to 1.3575 and 1.3540. • The pair has to break this level in order to test higher resistance at 1.3862 and 1.3935. • Being below the 100-day EMA and the RSI below 50 implies persistent bearish pressure. • Any additional indications of Fed rate cuts would bear down on the US Dollar and add to CAD strength. The USD/CAD currency pair is still under bearish pressure as it hovers close to 1.3720 in early European trade, pressured by dovish comments from the US Federal Reserve and de-escalation of geopolitical tensions in the Middle East. A short-term ceasefire between Iran and Israel has curbed safe-haven demand for the US Dollar, while Fed Governor Michelle Bowman’s mention of a possible July rate cut has contributed to weakness in USD. Technically, the pair remains below the 100-day EMA and the RSI is below the neutral 50 mark, adding credence to a bearish bias. Traders are watching the pivotal support level of 1.3635, with more significant downside risks on a break below this zone. USD/CAD is trading around 1.3720 in a bearish fashion with a weaker US Dollar and dovish Fed cues. The pair remains below the 100-day EMA, and the support is at 1.3635 while the resistance is at 1.3820. Breaking below support may lead to further losses down to 1.3575. • USD/CAD is trading around 1.3720 in early European trading, and it continues to be in a bearish mood. •  The pair remains below the 100-day Exponential Moving Average, indicating bearish pressure. • RSI lingers below the 50 level, supporting weak bullish momentum. • Fed Governor Michelle Bowman suggested a potential July rate cut, pressuring the US Dollar. • Geopolitical tensions subside as Iran-Israel ceasefire comes into effect, cutting safe-haven demand. • Support is at 1.3635, then 1.3575 and 1.3540 on sustained losses. • The resistance is at 1.3820; breaking above it could pave the way to 1.3862 and 1.3935. The USD/CAD pair is under pressure following the changing geopolitical and monetary policy trends. An agreement for a ceasefire between Israel and Iran has mitigated market tensions, leading to moving away from safe-haven currencies such as the US Dollar. This development has benefited commodity currencies such as the Canadian Dollar, particularly as global energy markets react to lower supply disruption risk. The diplomatic progress has introduced some stability into markets, which has enabled investors to begin to concentrate once again on economic fundamentals and central bank cues. USD/CAD DAILY PRICE CHART SOURCE: TradingView Compounding the US Dollar’s weakness are dovish indications emanating from the Federal Reserve. Fed Governor Michelle Bowman’s rhetoric hinting at a willingness to cut rates in July has fueled hopes of a more accommodative policy. The change of tone is weakening demand for the Greenback and adding to the Canadian Dollar’s strength. As sentiment adjusts to the prospect of lower US interest rates and diminished geopolitical risk, USD/CAD can continue to be pressured unless later economic data turns the outlook drastically. TECHNICAL ANALYSIS USD/CAD has a bearish inclination as it moves below the 100-day Exponential Moving Average (EMA), which is one of the most important medium-term trend direction indicators. The 14-day Relative Strength Index (RSI) is also below the middle of the neutral 50 level at 47.75, indicating diminishing bullish momentum. The pair is immediately supported at 1.3635, the June 18 low, then at 1.3575 just below the lower Bollinger Band and 1.3540, the June 16 low. On the other side, resistance is at 1.3820, consistent with the upper Bollinger Band. An extended advance above this level may set the stage for a challenge of 1.3862 and possibly the 100-day EMA at 1.3935. FORECAST The USD/CAD currency pair is expected to stay pressured if it remains below the 100-day EMA and is unable to regain buying momentum. Breakout below the near-term support of 1.3635 may initiate further losses to 1.3575, which serves as the lower edge of the Bollinger Band. Should bearish sentiment continue, the next substantial support is at 1.3540, the low made on June 16. Further US Dollar weakness on account of dovish Fed rhetoric and calm geopolitical tensions could speed up the breakdown move. Conversely, a rebound above the 1.3820 resistance level would alter the mood toward a short-term bullish reversal. If the duo is able to hold above this area, it can draw buying interest and move towards 1.3862, the May 29 high. Another break above it could set the stage towards the pivotal 100-day EMA level of 1.3935. Upside risk, though, remains limited unless backed by a more robust US Dollar or a change in risk appetite.

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Currencies

USD/CAD Reversal: US Dollar Recovery vs Tariff-Fueled Loonie Jitters

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  • February 24, 2025
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The USD/CAD currency pair recovered around 1.4220 in European trade as the US Dollar regained nearly all of its intraday decline even as dismal US flash PMI data arrived, with market sentiment still subdued amid impending threats of 25% tariffs on imports from Canada. Technical indicators such as a falling triangle pattern and a 20-period EMA indicate a range-bound trend with additional downside risk if important support levels are violated, but a break higher may drive the pair to higher resistance levels. The USD/CAD pair rebounds as the US Dollar recovers from its intraday losses despite disappointing US flash S&P Global PMI data for February. Investor sentiment is becoming cautious against the backdrop of impending fears about possible 25% tariffs for Canadian imports from President Trump, as the Bank of Canada’s Governor threatens of drastic economic ramifications in case tariffs are levied. KEY LOOKOUTS • Move below 1.4151 support, potentially indicating a greater downtrend and driving the pair towards December lows. • US Dollar, since its strength would offset poor US PMI figures and have a strong impact on USD/CAD movements. • Potential tariff news from the US government, since policy changes would again affect investor morale and Loonie stability. • Upside breakout above 1.4246, which would initiate a rally towards resistance levels if market sentiment is supportive. The USD/CAD currency pair has been resilient with a significant rebound to close to 1.4220 as the US Dollar regained intraday losses. Even though poor flash PMI data showed contracting service sector activity in the US, the USD was strong, which helped the Loonie pair. Yet, ongoing uncertainty over prospective 25% tariffs on Canada continues to support a defensive stance for the Canadian Dollar, as President Trump’s review of tariffs further fuels investor anxiety. US Dollar strength will counter weak US PMI figures, and hence the currency recovery will be a key driver for USD/CAD action. Tariff uncertainty is still a major factor, so watch closely for any policy changes by the US administration that may further erode investor confidence and Loonie stability. A fall below 1.4151 may see further selling towards December lows, but good US Dollar resilience holds the pair up even in the face of poor PMI data. Tariff uncertainty is still a major issue, and a breakout above 1.4246 on the upside may release further bullish momentum. • The USD regained its losses rapidly, supporting the pair to recover around 1.4220. • Even after disappointing US flash PMI, the strength of the USD is a major driver. • Speculation of possible 25% tariffs on Canadian imports continues to disturb investor confidence. • The pair is in a descending triangle with a support around 1.4151. • Overlapping of the Loonie price by the 20-period EMA indicates a sideways trend. • The RSI is still in the 40-60 region, showing indecision among market participants. • A bullish move above 1.4246 would potentially see the pair touching resistance areas at 1.4300 and 1.4380, or face further downtrends if it breaks below 1.4151. The US Dollar made a significant comeback in European trading sessions, recovering the majority of its previous losses following miserable US flash S&P Global PMI data. Investors seem to be taking the strength of the US Dollar despite the mixed signals from the economy, showing confidence in the overall strength of the currency. The USD/CAD currency pair has remained strong as the US Dollar recovers from previous losses despite poor US flash PMI figures for February. Investors are looking at the prospects for US monetary policy and the possible effect of an economic slowdown, which has not had a significant impact on the strength of the US Dollar. USD/CAD Daily Price Chart Chart Source: TradingView Meanwhile, market players are still wary as a result of impending threats from possible tariff measures. With President Trump considering not imposing 25% tariffs on Canadian imports and Bank of Canada Governor Tiff Macklem sounding the alarm about dire economic consequences, sentiment on the Canadian dollar is still guarded in this state of uncertainty. TECHNICAL ANALYSIS USD/CAD chart is characterized by a falling triangle formation, with significant support and resistance levels portending future direction. The 20-period EMA overlap signals that there is no strong momentum, while the 14-period RSI, which is always within a neutral range, points to the fact that traders are presently indecisive. Such technical indicators suggest that the market is in consolidation mode, and future price action will be guided by a definitive break from the present balance. FORECAST In case market sentiment turns negative, a breakdown below significant support levels would increase selling pressure, driving the pair towards lower levels seen in earlier sessions. Such a decline may be supported by ongoing economic uncertainties and policy issues, which would lead investors to take a more risk-averse approach that may extend the bearish trend. Conversely, if there is renewed buying interest and momentum picks up, the pair might rally towards higher resistance levels, re-establishing a more bullish trading regime. This would be an indication of enhanced confidence in economic indicators and an adjustment of policy risks, leading to a broader market rebound.

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