Canadian Dollar Forecast: USD/CAD Bounces from Oversold
USD/CAD was in a hard sell-off driving the pair into deep oversold conditions to finish last week. But an early-week bounce is squeezing shorts as a dual tariff announcement has unsettled the backing fundamentals in the pair.
Share this:
USD/CAD, Canadian Dollar Talking Points:
- After a consistent up-trend through May and much of June USD/CAD has been in a decisive sell-off for the past month and change.
- That sell-off produced oversold conditions on the daily chart, and a strong bounce today is opening the door for a cross back above the 30-level via RSI.
Sellers have been in-control on USD/CAD for the since the breakdown at 1.4150 support in mid-July, and this pushed the pair into oversold territory on daily RSI for the first time since January, which was followed by a strong bullish push that eventually led to the break back-above the 1.4000 handle. This comes after a dramatic weekend of headlines around tariffs between the U.S. and Canada, with the Canadian Dollar being punished on the prospect of more trade restrictions.
At this point, however, it’s difficult to separate what’s a short squeeze and what’s legitimate buying pressure on the back of the fundamental implication of this weekend’s events. From a price action perspective, a move of this nature must be respected but on the same token it’s still early if looking for a prolonged bullish continuation scenario.
USD/CAD Daily Chart with recent RSI Crosses
Chart prepared by James Stanley; data derived from Tradingview
USD/CAD: For Short-Term Confirmation
At this point the four-hour chart already shows a resistance test at prior support. But for this rally to continue we’re going to need to see bull show up at a higher-low to confirm topside continuation potential.
For that, there’s prior price action points of interest at 1.3795, 1.3756 and 1.3732. And, for next resistance, it’s the swing at 1.3908 that stands out as this was a spot of support-turned-resistance as the sell-off was unfolding.
USD/CAD Four-Hour Chart
Chart prepared by James Stanley; data derived from Tradingview
--- written by James Stanley, Senior Market Analyst, Global Macro
Related tags:
The complete CFD trading experience
Award-winning platforms, competitive spreads, low commissions and dedicated support.
We live and breathe the markets and are dedicated to helping traders realise their ambitions as we continue to set the industry bar.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
Gold Price Forecast: XAU/USD Avoids Breakdown as Yields Surged but Can it Continue?
Surging Treasury yields sent a jolt across markets last week but, so far, gold prices have held above the FOMC low. The big question now is whether that can continue and, if not, will bulls show up at $4100 or $4k like they did in June and July?
Equity Indices Q4, 2026 Outlook: Cracks Begin to Show
There's still an open door for a melt-up in the S&P 500 and Nasdaq but the Dow and Russell 2000 are looking more vulnerable, and until calm hits the Treasuries market there's a higher probability for volatility. The big question is whether that's a next quarter theme or not.
USD/CAD and USD/MXN Q4 2026 Outlook: Will the U.S. Dollar Dominate North America Again?
The final stretch of 2026 is approaching, and North America's major currencies have begun to show a shift in the strength dynamics seen earlier in the year. New expectations of a more aggressive monetary policy stance, particularly in the United States, could be significantly reshaping the outlook for the region. At the same time, this backdrop, combined with potential trade tensions across North America, may become one of the most important drivers of currency performance in the months ahead.
StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation.
StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.