USDCAD Technical Analysis – We finally broke below a key support

Fundamental Overview

Yesterday, the US PPI report came in higher than expected but the focus was on the details that feed into the Core PCE index, which is what the Fed focuses on. Those details were all very soft and helped to bring the early estimates down to more benign levels. In fact, the Core PCE Y/Y is now projected to fall to 2.6% vs. 2.8% prior. That’s good news for the Fed.

The US Dollar fell across the board as a result and eventually the bearish momentum increased substantially in the evening as the Trump’s tariffs saga came to an end. In fact, the US President announced his reciprocal tariffs that could go into effect in April but the overall tone of it wasn’t aggressive and sounded a lot like the start of a negotiating process to bring tariffs to a fair level for everyone.

On the CAD side, we got a key technical breakout that increased the bearish momentum in the USDCAD pair. It’s been all about the US Dollar softness and with the markets now less concerned about tariffs, the Loonie got the green light to finally appreciate. The economic data out of Canada has been showing gradual improvement and the central bank is now past the peak in dovishness which should further support the CAD.

USDCAD Technical Analysis – Daily Timeframe

On the daily chart, we can see that USDCAD finally broke below the key support around the 1.4280 level and extended the drop into new lows as the sellers piled in more aggressively. If we get a pullback into the support now turned resistance, we can expect the sellers to step in with a defined risk above the resistance to position for a drop into the 1.40 handle. The buyers, on the other hand, will want to see the price rising back above the resistance to start targeting the 1.45 handle next.

USDCAD Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see more clearly the recent price action with the consolidation near the support until we get the breakout following the benign US PPI and the end of the Trump’s tariffs saga. There’s not much else we can glean from this timeframe as the price is trading right in the middle of two key levels, so we need to zoom in to see some more details.

USDCAD Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we have a minor downward trendline defining the current bearish momentum. The sellers will continue to lean on it to keep pushing into new lows, while the buyers will look for a break higher to position for a potential pullback into the resistance. The red lines define the average daily range for today.

Upcoming Catalysts

Today we conclude the week with the US Retail Sales.