Technical analysis: USD/CAD faces selling pressure as US dollar underperforms
2025-07-04 18:15:54
On Friday (July 4), USD/CAD fell to around 1.3565 in European market trading and then reversed in a V shape, trading around 1.3590, unchanged from the opening price. Although USD/CAD rebounded in the short term, USD/CAD still faced selling pressure, and the US dollar gave up most of the gains after the release of yesterday's non-agricultural data.
The passage of Trump's massive bill in the Republican-controlled House of Representatives, which is expected to add more than $3 trillion to the fiscal debt, did not surprise investors and kept volatility low as U.S. investors closed for July 4th celebrations.
The Canadian dollar has underperformed its peers due to uncertainty surrounding the July 9 tariff deadline. The Canadian economy has yet to finalize any trade deal with the United States and will likely face higher tariffs starting next week. Concerns that global trading partners will start paying tariffs on August 1 continued to weigh on market sentiment early Friday, reinforcing the short-term bearish outlook.
Technical Analysis
(Source of USD/CAD daily chart: Yihuitong)
Technical indicators are clearly pointing downwards, signaling a possible break below the June low of 1.3539, extending the downward trend. In this case, the tentative support line from July 2023 could play a supporting role around 1.3455. If this level is lost, the decline could accelerate towards the 1.3355 support range, which was last tested in January-February 2024. Further declines could target the 1.3230-1.3275 range.
On the upside, bulls may face immediate resistance between the 20-day simple exponential moving average (EMA) of 1.3660 and the psychological level of 1.3700. Further up, the 50-day EMA and the 1.3800 level may limit the upside momentum and prevent the pair from quickly recovering to 1.3915.
All in all, USD/CAD’s current bearish phase seems to have more downside potential and could form new lows around 1.3460.
The passage of Trump's massive bill in the Republican-controlled House of Representatives, which is expected to add more than $3 trillion to the fiscal debt, did not surprise investors and kept volatility low as U.S. investors closed for July 4th celebrations.
The Canadian dollar has underperformed its peers due to uncertainty surrounding the July 9 tariff deadline. The Canadian economy has yet to finalize any trade deal with the United States and will likely face higher tariffs starting next week. Concerns that global trading partners will start paying tariffs on August 1 continued to weigh on market sentiment early Friday, reinforcing the short-term bearish outlook.
Technical Analysis
(Source of USD/CAD daily chart: Yihuitong)
Technical indicators are clearly pointing downwards, signaling a possible break below the June low of 1.3539, extending the downward trend. In this case, the tentative support line from July 2023 could play a supporting role around 1.3455. If this level is lost, the decline could accelerate towards the 1.3355 support range, which was last tested in January-February 2024. Further declines could target the 1.3230-1.3275 range.
On the upside, bulls may face immediate resistance between the 20-day simple exponential moving average (EMA) of 1.3660 and the psychological level of 1.3700. Further up, the 50-day EMA and the 1.3800 level may limit the upside momentum and prevent the pair from quickly recovering to 1.3915.
All in all, USD/CAD’s current bearish phase seems to have more downside potential and could form new lows around 1.3460.
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- 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.
