© MENAFN / Original Author: Walid Salah El Din
USD/CAD Wave Analysis – August 28, 2025
The USD/CAD currency pair has continued to attract significant attention among traders as economic uncertainties, inflationary pressures, and policy divergence among central banks influence global forex trends. As of late August 2025, the pair exhibits signs of forming a distinct wave pattern as part of Elliott Wave Theory, aiding technical traders in forecasting future price action.
This detailed analysis aims to delve into the current wave structure of USD/CAD, incorporating technical indicators, broader market sentiment, and fundamental factors influencing the pair. The analysis is rooted in the original work published by Walid Salah El Din on MENAFN and expands upon it using verified information from credible sources.
Overview of USD/CAD Performance in 2025
– The USD/CAD pair has generally moved within a moderately bullish structure throughout 2025.
– Key drivers behind the price action include the differential in monetary policy between the Federal Reserve and the Bank of Canada.
– Higher energy prices, particularly crude oil, have added volatility due to the Canadian economy’s dependence on oil exports.
Recent Price Behavior
– August 2025 has seen the USD appreciating consistently against the CAD, following hawkish guidance from the Federal Reserve as it continues to prioritize inflation containment.
– Traders have observed a multi-week uptrend, with USD/CAD reaching the 1.3800 level, a significant resistance zone that coincides with Fibonacci extensions and past price action reversals.
Elliott Wave Analysis
According to the Elliott Wave Theory, market prices move in predictable patterns governed by investor psychology. Waves are categorized as either impulsive (moves in the direction of the main trend) or corrective (counter-trend).
Current Impulsive Wave Count
– The pair appears to be in the fifth wave of a larger impulsive sequence that began in early 2024.
– Wave 1 initiated with a strong rally following the surprise pause in the Bank of Canada’s tightening cycle.
– Wave 2 retraced nearly 50 percent of Wave 1’s gains, consistent with typical corrective behavior under Elliott Wave principles.
– Wave 3 extended significantly through mid-2025, supported by U.S. interest rate hikes and stable macroeconomic data from the United States.
– Wave 4 presented a sideways correction lasting nearly two months during which USD/CAD consolidated in a tight range between 1.3400 and 1.3550.
– The current Wave 5 is in progress and could target the 1.3900 to 1.4000 zones depending on external catalysts.
Projected Wave Targets
Using Fibonacci extensions drawn from the start of Wave 1 to the end of Wave 3:
– 61.8 percent extension: 1.3750 (already reached)
– 100 percent extension target: 1.3950
– Potential upper cap at 1.4000, a strong psychological resistance
Corrective Wave Outlook
Once Wave 5 completes, analysts expect an ABC correction to begin:
– Wave A: Possible drop toward the 1.3600 support area
– Wave B: Temporary retracement, potentially up to 1.3750
– Wave C: A final decline toward 1.3450 or even lower, depending on macro developments
Key Technical Indicators
To validate the wave analysis and deliver actionable outlooks, traders commonly rely on technical indicators such as:
Moving Averages
– The 50-day moving average (50 MA) is near 1.3500, offering medium-term support.
– The 200-day moving average is just below 1.3300, indicating a longer-term bullish trend.
– Price action consistently remaining above these two averages supports continued upward movement, at least until the end of Wave 5.
Relative Strength Index (RSI)
– RSI is currently hovering around 70, suggesting overbought territory.
– May indicate a temporary pullback
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