**Elliott Wave Analysis of USD/CAD: September 1, 2025**
*Based on original analysis by EWM Interactive*
The USD/CAD currency pair has seen notable price movements over the past several months, driven by various economic forces including interest rate decisions, inflation data, global oil prices, and central bank guidance. This article expands upon the Elliott Wave analysis originally published by EWM Interactive on September 1, 2025, delving deeper into the current structure, wave count, and potential scenarios for traders moving forward. We’ll also incorporate relevant fundamentals to paint a clearer picture for market participants.
**Overview of Elliott Wave Theory**
Before dissecting USD/CAD’s price action, let’s briefly revisit Elliott Wave Theory. It is based on the idea that markets move in repetitive patterns, known as waves, influenced by the psychology of investors. The general structure includes:
– Impulse waves: These are five-wave moves in the direction of the prevailing trend (labeled 1, 2, 3, 4, 5).
– Corrective waves: These are three-wave counter-trend moves (labeled A, B, C).
– Patterns appear on all timeframes and are fractal in nature.
Correct application of Elliott Wave Theory allows traders to forecast likely future price targets and anticipate reversals.
**USD/CAD Recent Price Movement Overview**
In the original article, EWM Interactive pointed out that USD/CAD had recovered significantly after a corrective decline from the 2022 highs. Specifically, since the low of 1.3092 registered in January 2025, the pair had staged an impulsive rally into the 1.3760 zone by the end of August 2025.
This recent performance marks a continuation of a larger Elliott Wave cycle on the daily chart, with the pair potentially finishing a five-wave impulse, or it could be part of a more complex corrective structure.
Let’s break down the full analysis in more detail.
**Wave Count on the Daily Chart**
According to EWM Interactive’s labeling, USD/CAD appears to be forming a 5-wave impulse from the January 12, 2025 low.
– Wave 1: Rallied from 1.3092 to approximately 1.3450, establishing the initial leg of the uptrend.
– Wave 2: A retracement that tested the support near 1.3260. This pullback fits with a standard Fibonacci retracement of about 50 percent of wave 1.
– Wave 3: The most aggressive portion of the rally, rising from 1.3260 up past 1.3700. Wave 3 waves are normally the strongest and most extended. In Elliott Wave terms, this wave is often 161.8 percent or more of wave 1.
– Wave 4: The corrective wave, moving sideways in a possible triangle formation or zigzag. Wave 4’s correction is typical in form and shallower in depth compared to wave 2.
– Wave 5: The push from wave 4 support near 1.3570 toward the 1.3760 high seen in late August. This fifth wave could be ending the overall impulsive pattern or may extend further if momentum remains.
**Potential Ending Diagonal in Wave 5**
EWM Interactive highlighted the possibility that Wave 5 may be taking the form of an *ending diagonal*. An ending diagonal is a special type of motive wave that occurs in fifth waves and is a sign of trend exhaustion. It is composed of five waves subdivided into three-wave structures (3-3-3-3-3) rather than the usual five-wave structure (5-3-5-3-5).
Key characteristics of ending diagonals:
– Appear in Wave 5 of impulses or in Wave C of corrections.
– Each sub-wave forms a three-wave pattern.
– Structure becomes narrower as it nears completion.
– Accompan
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