The USD/CAD pair continued its weakness in Asian trading on Friday, approaching the 1.3580 low, with an overall bearish trend. The recent pressure on the US dollar is mainly due to Japanese intervention in the foreign exchange market, triggering volatility in global currency markets and weakening the dollar's short-term appeal. Looking at weekly performance, the dollar has generally weakened against major currencies, particularly the Japanese yen, reflecting a temporary outflow of funds from dollar assets.

Although the US dollar index rebounded slightly to around 98.20, it remains at a relatively low level, indicating insufficient overall momentum. Furthermore, while the latest Federal Reserve meeting kept interest rates unchanged, internal disagreements emerged, with some officials leaning towards a more hawkish stance. This provided some short-term support for the dollar, but failed to reverse its overall weak structure.

In contrast, the Canadian dollar has remained relatively strong. The Bank of Canada has recently signaled a possible interest rate hike, and inflationary pressures remain resilient, especially given persistently high energy prices, providing fundamental support for the Canadian dollar. Meanwhile, the continued high and volatile oil prices have also indirectly benefited the Canadian dollar as a resource currency.

Overall, USD/CAD is currently driven by two factors: on the one hand, downward pressure from a weakening US dollar, and on the other hand, a strengthening Canadian dollar supported by policy and commodities, which keeps the exchange rate on a downward trend.

From a technical perspective, the USD/CAD daily chart structure is clearly bearish. The price continues to trade below the 20-day moving average, with the moving average around 1.3690 acting as significant resistance , indicating that bears are dominating the market. Meanwhile, the 61.8% Fibonacci retracement level at 1.3667 forms a dense resistance zone, limiting any potential short-term rebound.

In terms of momentum indicators, the RSI has fallen below 40, entering a weak zone, and there is no oversold signal, indicating that there is still room for further decline; the MACD is below the zero axis and continues to diverge, reinforcing the bearish trend.

Key support levels are concentrated in the 1.3525 and 1.3480 area ; a break below these levels would open up further downside potential. In the short term, the exchange rate is likely to continue its downward trend.

Editor's Viewpoint : The current USD/CAD movement is primarily driven by the convergence of a weakening US dollar and fundamental support for the Canadian dollar. Technically, it has entered a downtrend, and any short-term rebounds are likely corrections. Unless the US dollar shows clear reversal signals, the exchange rate may still have room to fall further. The recommended trading strategy is to short the market, while also monitoring the marginal impact of oil prices and central bank policy changes.