Title: USD/CAD Attempts Breakout at Critical Resistance Zone
Source: Based on analysis originally published by Economies.com, August 20, 2025
The USD/CAD currency pair has recently emerged as a focal point for forex traders as it approaches a key technical resistance level. The pair is showing signs of bullish momentum, threatening to breach levels that have historically acted as strong barriers. Understanding the underlying technical and fundamental dynamics driving this movement is essential for both short-term traders and long-term investors.
This article builds upon the original analysis by Economies.com and adds broader context, including technical indicators, economic data, and fundamental catalysts that may influence price action in the near future.
Overview of USD/CAD Price Movement
As of the latest market update:
– The USD/CAD pair traded close to the 1.3520 area
– Price action hovered near a previously tested resistance zone at 1.3500–1.3520
– A potential bullish breakout would reinforce the likelihood of further upward movement toward 1.3600 and even 1.3660 zones
This aligns with a larger trend of US dollar strength supported by robust US economic data and persistent expectations of tight monetary policy from the Federal Reserve. On the flip side, softer commodity prices — particularly crude oil, which heavily influences the Canadian economy — have placed downward pressure on the Canadian dollar.
Key Technical Analysis
According to the original source and corroborated by additional chart analysis:
Support and Resistance Levels:
– Immediate resistance: 1.3520
– Next resistance target: 1.3600
– Further breakout zone: 1.3660 area
– Near-term support: 1.3455
– Strong technical support: 1.3380
Moving Averages:
– The 50-day SMA is currently crossing above the 100-day SMA — a bullish crossover
– Price is trading above the 200-day SMA, signaling a continuation of long-term bullish momentum
Indicators:
– Relative Strength Index (RSI): Approaching 70, showing bullish but overbought conditions
– MACD: Confirming bullish momentum with a positive crossover on the daily chart
Patterns:
– The pair appears to be completing a bullish pennant or ascending triangle formation
– A confirmed breakout above 1.3520 could set the pair on a path toward a measured move of 100–120 pips upwards
Potential Bullish Scenario
If the USD/CAD succeeds in breaking and holding above the critical resistance level of 1.3520, the bullish scenario could unfold as follows:
– Follow-through buying could push the pair toward the 1.3600 level in the short-term
– Sustained bullish momentum may drive price action toward the 1.3660–1.3700 zone
– On a higher timeframe, this could mark a longer-term shift in trend favoring the US dollar
Key Fundamentals Backing the US Dollar
A number of fundamental developments continue to support the USD’s strength against the CAD:
1. Robust U.S. Economic Data:
– July’s U.S. retail sales exceeded expectations, suggesting resilient consumer spending
– Nonfarm payrolls have remained stable, reducing the case for interest rate cuts
– Core inflation metrics show persistence, reinforcing the Federal Reserve’s hawkish stance
2. Hawkish Federal Reserve Positioning:
– Fed Chair Jerome Powell stated in recent speeches that inflation is still above target
– Market participants price in a lower likelihood of rate cuts before Q1 2026
– The interest rate differential between the U.S. and Canada remains in favor of the USD
3. Safe-Haven Demand:
– With rising geopolitical tensions and global economic uncertainty, demand for the USD as a safe-haven asset remains high
Canadian Dollar Weakness Catalysts
While the U.S. dollar strengthens, several headwinds weigh on the Canadian dollar:
1. Oil Market Volatility:
– Cr
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