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USD/CAD is caught in a tug-of-war between bulls and bears, with 1.39 becoming the new battleground. Canada's CPI may trigger a 100-point rally.

2025-08-15 18:12:59

USD/CAD has rebounded from key July support between 1.3600 and 1.3620, reinforcing technical momentum. While the pair has retreated to support, further gains towards 1.39, or even 1.40, are possible before the broader trend re-starts. Futures market traders are collectively shorting the Canadian dollar, providing additional support for the short-term bullish outlook for USD/CAD.

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USD/CAD Technical Analysis: US Dollar vs. Canadian Dollar

The Canadian dollar depreciated significantly against the US dollar between February and June, falling 8.5%—a decline that eased somewhat after President Trump suspended tariffs on Canada, Mexico, and China. Support was found around the 1.36 level, which coincides with a multi-month high volume node (HVN) and the 200-week exponential moving average.

Although the current rebound is still a technical correction (suggesting that USD/CAD may eventually return below 1.36), bulls still have further room to rise before the trend reverses.

Whether the exchange rate can test the psychologically important 1.40 level (near the 2022 high of 1.3977) will depend on the extent to which the Federal Reserve resists the Trump administration's calls for deeper rate cuts. Expectations for Bank of Canada policy are also crucial, with Canadian inflation data due next week serving as a key indicator.

USD/CAD technical analysis: daily chart

Looking at the daily chart, bears have attempted to break below the 1.36 mark on HVN three times, but all attempts have failed. Each attempt was followed by a strong rebound, with the third rebound pushing the exchange rate to a 10-week high.

The price has now fallen back to a strong support area, which is the convergence of the 50% Fibonacci retracement level, the 50-day moving average and the monthly pivot point. It is worth noting that on Thursday (August 14), the candlestick formed a bullish engulfing pattern and constructed a higher low with the monthly pivot point as the fulcrum.

As long as the exchange rate holds above Thursday's low of 1.3745, we maintain a bullish stance. A short-term upside target could be the 1.3885 high near the 200-day moving average. A break above 1.39 would open up the monthly R1 pivot point, the 2022 high, and the psychological level of 1.40.

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(USD/CAD daily chart, source: Yihuitong)

At 17:57 Beijing time, the US dollar was trading at 1.3794/95 against the Canadian dollar.
Risk Warning and Disclaimer
The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.

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