Title: USD/CAD Under Sustained Pressure: In-Depth Technical and Fundamental Analysis
Original Author: Economies.com Analysis Team
Date: August 11, 2025
Source Credit: Adapted and expanded from original post on Economies.com (https://www.economies.com)
Overview:
The USD/CAD currency pair continues to experience downward momentum, following a noticeable bearish trend that has dominated its price action since mid-July 2025. This persistent pressure suggests that the pair is struggling to find strong support as broader macroeconomic fundamentals, technical indicators, and market sentiment lean toward Canadian dollar strength, or at least U.S. dollar weakness.
This article delves into:
– The recent price action and current technical levels of USD/CAD
– Macro-economic drivers contributing to the pair’s weakness
– Forecasts based on major chart patterns and trend analysis
– Comparative monetary policy from the U.S. Federal Reserve and Bank of Canada (BoC)
– Key upcoming events that could influence direction
Technical Summary:
As of August 11, 2025, USD/CAD is trading below its 50-day and 100-day exponential moving averages (EMAs), which reaffirms a bearish momentum.
Key technical observations:
– The pair traded as low as 1.3290 in early August, violating a critical support zone around 1.3350.
– The break below 1.3350 signals an attempt to move towards subsequent support levels at 1.3250 and 1.3160.
– Resistance is now building near 1.3415 and more strongly at 1.3490, coinciding with both the 100-day EMA and a declining trendline from June highs.
– The Relative Strength Index (RSI) is hovering around 40, suggesting weak bullish interest but not yet into oversold territory.
Technical indicators generally point to continued downside pressure unless a significant reversal or geopolitical shift occurs.
Trend Metrics and Patterns:
Based on chart analysis, several key technical patterns are emerging:
– Descending Triangle: The pair has been forming a descending triangle since late June 2025, with consistent lower highs and support near the 1.3340 region. This is typically a bearish continuation pattern.
– Bearish Crossover Signals: The 50-day EMA is on track to cross below the 200-day EMA soon unless reinforced by bullish price action, which would constitute a bearish “death cross.”
– Price channel breakdown: A rising channel that began in March 2025 was cleanly broken in early July, further confirming the bearish bias and the absence of strong support from U.S. investors.
Fundamental Analysis: What’s Driving the Bearish Tone?
A combination of Canadian economic strength, subdued U.S. economic indicators, and divergent monetary policy outlooks have added fuel to the recent USD/CAD downtrend.
Here’s a breakdown of the key fundamental influences:
1. Canadian Economic Performance:
– GDP Growth: Canada has surprised markets with resilient economic data. Prelim Q2 2025 GDP growth is estimated at 2.3%, outperforming the U.S. at 1.1%.
– Jobs Market: Employment data for July showed a net gain of over 35,000 new positions, beating expectations. Unemployment remains at a historical low of around 5.2%.
– Energy Exports: A rebound in crude oil prices is bolstering the Canadian dollar. West Texas Intermediate (WTI) oil is back above $84 per barrel, increasing demand for the CAD given Canada’s large energy export base.
– Inflation: Headline CPI in Canada eased to 2.5% year-on-year in July, but core pressures remain, prompting policymakers to remain vigilant.
2. U.S. Macro Weakness:
– GDP Slowdown: Second-quarter data showed only 1.1% growth, mainly fueled by consumer spending as business investment weakened.
– Labor Market Softness:
Read more on USD/CAD trading.