**Elliott Wave Analysis of USD/CAD – August 6th, 2025**
*Adapted and Expanded from EWM Interactive’s Elliott Wave Update*
*Original Author: EWM Interactive*
*Additional Research Included*
The USD/CAD currency pair has seen significant movement over the past several months, influenced by a variety of macroeconomic factors including interest rate differentials, commodity prices, and central bank policies from both the Federal Reserve and the Bank of Canada. In EWM Interactive’s Elliott Wave update from August 6th, 2025, a bearish forecast was presented based on Elliott Wave patterns. This article expands on that analysis by incorporating technical indicators, supplementary chart patterns, and market fundamentals to provide a detailed assessment of the USD/CAD outlook.
## Summary of Elliott Wave Principle
The Elliott Wave Principle is a form of technical analysis that identifies wave patterns within financial markets, proposing that price movements follow repetitive cycles based on investor psychology. According to Elliott, market trends unfold in five-wave patterns in the direction of the main trend and three-wave patterns that correct the trend.
– **Impulse Waves (5-wave structures)**: These are movements in the direction of the larger trend.
– **Corrective Waves (3-wave structures)**: These go against the trend and generally retrace portions of impulse waves.
The patterns are fractal, meaning they form on various timeframes — from intraday charts to secular trends over decades.
## Overview of the USD/CAD Market Context
Several fundamental factors have affected the recent direction of the USD/CAD exchange rate:
– **Oil Prices**: Canada is a major crude oil exporter. Higher oil prices tend to strengthen the Canadian Dollar (CAD), whereas declines often weaken it.
– **Interest Rates**: Differentials between interest rates set by the Federal Reserve and the Bank of Canada remain a large driving force behind USD/CAD valuation.
– **Economic Data**: GDP growth, employment figures, inflation readings, and trade data from both the US and Canada weigh on the cross in the short to medium term.
– **Risk Sentiment**: As a commodity currency, the CAD performs better during periods of global optimism, while risk-off environments favor the US Dollar.
Let’s dive into the technical Elliott Wave update and what it suggests about near-term and intermediate-term odds for the USD/CAD pair.
## Elliott Wave Analysis: Bearish Outlook for USD/CAD
As reported by EWM Interactive, the price action of USD/CAD suggests a completed impulsive wave structure at higher degrees and a likely beginning of a broader corrective decline. Here is the breakdown of the observed wave pattern:
### Wave Count Summary
– **Primary Wave (5)**: Appears to have concluded around the 1.3700 level. This marks the end of the broader uptrend possibly originating from the 2021 lows.
– **Corrective Wave (A)**: A sharp move down has unfolded since, counted as the start of a larger A-B-C correction.
– **Minor Wave Structure**:
– Wave A down: Impulsive and aggressive, breaking key previous support zones.
– Wave B: Shallow retracement, suggesting weak bullish momentum.
– Wave C (currently in progress): Expected to complete the correction by taking prices lower toward support regions below 1.3000.
### Fibonacci Retracement Analysis
Fibonacci tools applied to the Primary Wave (5) demonstrate that:
– 23.6% retracement: Already broken, indicating weakness in USD.
– 38.2%–50% zone: Potential next level for correction to complete, located between 1.2900 and 1.2700.
This zone also coincides with prior structural support levels on the weekly chart.
## Technical Indicators Point to More Downside
While Elliott Wave patterns offer a theoretical roadmap, confirmation from technical indicators helps traders evaluate actionable levels. Here are several indicators supporting a bearish USD/CAD scenario:
– **MAC
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