Title: Elliott Wave Analysis of USD/CAD – Forecast Update and Market Outlook (August 2025 Edition)
Original analysis and content credit: EWM Interactive
Expanded and restructured for clarity and added context
The USD/CAD currency pair has long been a bellwether for understanding broader macroeconomic themes within North America. With the U.S. dollar acting as the world’s reserve currency and Canada positioned as a major commodities exporter, shifts in sentiment around inflation, interest rates, and risk appetite are often reflected in the price of USD/CAD. Technical analysis, and in particular Elliott Wave Theory, provides valuable insights into the price structure over time.
EWM Interactive’s most recent analysis from August 11, 2025, presents a compelling Elliott Wave count for USD/CAD. The chart highlights a mature corrective structure, suggesting a potential reversal ahead. In this article, we will explore the wave structure in detail, frame the analysis with supporting macroeconomic and technical factors, and consider the longer-term implications for traders and investors.
Overview of Elliott Wave Theory
Before diving into the current count, it is essential to revisit the core principles of Elliott Wave Theory:
– Markets move in repetitive cycles based on collective investor psychology.
– A complete market cycle consists of five waves in the direction of the overall trend (impulse) followed by three waves against it (correction).
– Waves can be labeled as follows:
– Impulse waves: 1, 2, 3, 4, 5
– Corrective waves: A, B, C
– Fractal nature: Each wave can be subdivided into smaller degree waves.
Now, let’s examine how this theory has been applied to the current USD/CAD structure according to EWM Interactive.
Wave Count Analysis
According to EWM Interactive, the USD/CAD currency pair has completed an impulsive rally from its 2021 bottom near 1.2000 to a high around 1.3975. That move is labeled as a five-wave impulse (labeled I–II–III–IV–V). This wave sequence kicked off a corrective structure, identified as an A–B–C zigzag.
Main Features of the USD/CAD Elliott Wave Count:
– The upward five-wave sequence began in mid-2021 and peaked in late 2022.
– The peak into wave V is believed to represent a significant cycle top.
– The corrective decline from 1.3975 unfolded in a clear zigzag pattern (labeled A–B–C).
– Wave A was a sharp drop to around 1.3090.
– Wave B retraced back to the 1.3650 region.
– Wave C continued lower and is presumed to have completed or be near completion around 1.3060.
This corrective pattern indicates that the downtrend, which was counter-trend to the larger impulsive rally, is possibly exhausted.
Interpretation and Forecast
Here is the potential Elliott Wave interpretation based on the updated count:
– The entire structure since 2021 appears to be a completed 5–3 cycle.
– If wave C of the correction is indeed complete, the larger uptrend may now be prepared to resume.
– This infers the start of a new five-wave impulse to the upside, which could retrace the corrective losses and eventually surpass wave V’s peak at 1.3975.
Elliott Wave guidelines support this view. After an ABC correction concludes, a new impulse often follows in the direction of the original five-wave trend.
Macroeconomic Factors Influencing USD/CAD
To enrich our understanding of this technical pattern, it is important to layer on broader fundamental trends that have historically weighed on USD/CAD.
1. Interest Rate Differential
– The U.S. Federal Reserve and the Bank of Canada (BoC) play significant roles in shaping USD/CAD via policy divergence.
– As of mid-2025, the Fed has maintained higher rates
Read more on USD/CAD trading.