Title: USD/CAD Technical Analysis: Price Hits Projected Target and Signals Further Bearish Momentum
Source: Economies.com (original analysis posted on August 29, 2025)
Author: Economies.com Analyst Team
The USD/CAD currency pair recently achieved our previously forecasted target level, presenting significant implications for both technical traders and market analysts tracking this popular North American forex pair. According to the analysis from Economies.com on August 29, 2025, the pair successfully declined to reach the 1.3515 support level. This movement confirms the controlled selling momentum and opens the door for deeper downside movements in the near term.
This extended analysis interprets the recent USD/CAD behavior, pulls in context from broader economic indicators, and offers a comprehensive outlook based on multiple technical and fundamental factors affecting the pair.
Overview of the Recent Price Movement
– The USD/CAD pair descended to a recent support level at 1.3515, which aligns with bearish projections made earlier by Economies.com.
– This move confirms the strength of the downtrend channel the pair has been trading within since early August 2025.
– Price action reveals sustained selling interest from traders and institutions, particularly driven by changes in U.S. interest rate expectations and fluctuating oil prices that directly impact the Canadian dollar.
Key Technical Developments
1. Price Action and Structure:
– The pair has been fluctuating within a clearly defined descending channel.
– Lower highs and lower lows over the past three weeks have cemented bearish market structure.
– After testing the resistance near 1.3650 earlier in the month, repeated failures sent the pair lower to meet the 1.3515 target.
– A break below this level will signal the potential for a continuation toward the 1.3420 region, the next significant support based on May and June’s price zones.
2. Moving Averages:
– The 50-Day Exponential Moving Average (EMA) is now sloping downward and hovers above the current market price, confirming a short-to-medium term bearish trend.
– The 200-Day Simple Moving Average (SMA) remains neutral but could turn negative if the market closes below 1.3500 for several sessions, indicating heightened long-term selling pressure.
3. Momentum Indicators:
– The Relative Strength Index (RSI) is currently hovering near 42, showing mild bearish momentum without reaching oversold territory.
– MacD (Moving Average Convergence Divergence) histogram continues to print below the baseline, pointing to continued downward momentum and lack of bullish divergence.
4. Fibonacci Levels:
– Retracement levels measured from the July swing high at 1.3890 down to the recent swing low at 1.3515 place emphasis on the 38.2% retracement near 1.3640 – serving as initial resistance.
– The 23.6% level at 1.3575 is immediately overhead and may be tested should there be a short-term bounce.
Fundamental Drivers Behind USD/CAD’s Bearish Flow
1. Crude Oil Strength:
– As Canada is one of the largest oil exporters globally, the Canadian dollar tends to strengthen when oil prices rise.
– Over August 2025, WTI crude futures rallied past $85 per barrel, buoyed by OPEC+ output constraints and shrinking global inventories.
– Rising oil prices act as a tailwind for the CAD, exerting downward pressure on USD/CAD.
2. U.S. Dollar Weakness:
– Broad USD softness in late August was driven by dovish tones from Federal Reserve officials, signaling that further rate hikes in 2025 might be paused in favor of economic expansion.
– U.S. CPI data released earlier in the month showed inflation cooling slightly faster than expected, strengthening this narrative.
– Weak U.S. retail sales and consumer sentiment data also contributed to lower Fed hike expectations,
Read more on USD/CAD trading.