Canadian Dollar Forecast: USD/CAD Fight at 1.4000

Canadian Dollar, USD/CAD Talking Points:

USD/CAD tested the 1.4000 handle multiple times last week and sellers have so far continued to hold the currency below the big figure on a daily close basis.
The bigger question now is broader USD trends. A late downgrade from Moody’s on Friday cast a bearish tone on the USD to start this week, but so far the Dollar has held higher-low support. If bulls can continue that move, USD/CAD may have a larger pullback in store, highlighting the 1.4149-1.4178 zone of prior support.
USD/CAD remains as one of the more attractive pairs for USD-weakness scenarios, in my opinion, and I’ll be looking in-depth at both USD/CAD and broader USD markets in the weekly webinar. Click here to register.

The U.S. Dollar took a hit to start this week following a late downgrade from Moody’s on Friday. Yields on 30-year Treasury Bonds tested above 5% and a number of markets saw an initial reaction that has since pared back. In the currency market, that reaction was a push of USD-weakness that, so far, has remained contained with EUR/USD holding resistance and USD/JPY grasping at support.

USD/CAD, on the other hand, has held below the 1.4000 level and for USD-bears or for those looking for USD-weakness scenarios to get another shot-in-the-arm, there’s continued context for bearish continuation that remains at-play.

I looked into the pair on Friday and before that I had written a longer piece on USD/CAD and broader U.S. Dollar trends on Wednesday. At this point, the big takeaway has been a recent series of lower-highs that’s built since last Tuesday, combined with four consecutive daily rejections at the 1.4000 psychological level.

USD/CAD Daily Price Chart

Chart prepared by James Stanley; data derived from Tradingview

USD/CAD Congestion Clean Up

The bearish trend in USD/CAD through April and early-May was pronounced and clear, and even as the USD started to show signs of recovery in late-April USD/CAD sellers continued to push. But as a case of RSI divergence built on the daily chart to go along with a falling wedge, sellers were clearly losing momentum and price snapped back as the USD rally took on another push of strength, with four consecutive green weekly candles.

But as I had been highlighting the bigger question was whether USD/CAD sellers would step in to defend lower-highs and so far, that’s been the case with the hold at 1.4000.

The bigger question is USD dynamics, and if we are seeing USD bears take another step forward then the short-side trend in USD/CAD remains attractive. But, if we are in front of a continued USD rally, it’s going to be difficult for USD/CAD bears to remain in-control and instead, there’s a deeper area of resistance on the chart, around the 1.4149-1.4178 area, which was resistance-turned-support and is now confluent with the 38.2% retracement of the 2025 sell-off.

USD/CAD Weekly Chart

Chart prepared by James Stanley; data derived from Tradingview

USD/CAD Shorter-Term

At this point bears have continued to hold lower-high resistance at the 1.4000 level and after last week’s digestion, there’s a clear push as sellers have posed a breakdown to a lower-low. This keeps bears in order for short-term trends and the next major level ahead is the 1.3905 prior swing-low, this was resistance in late-April and then became support twice in May. If sellers can breach that, the next areas of support are the 1.3781-1.3813 zone that had held the lows previously, and then the 1.3750 psychological level that marks the 2025 low and was last in-play two weeks ago.

USD/CAD Four-Hour Chart

Chart prepared by James Stanley; data derived from Tradingview

--- written by James Stanley, Senior Strategist

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.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67.6% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please ensure you fully understand the risks involved by reading our full risk warning.

FOREX.com is a trading name of StoneX Europe Limited, and FOREX.com/ie is a domain operated by StoneX Europe Ltd, a member of StoneX Group Inc. StoneX Europe Ltd, is a Cyprus Investment Firm (CIF) company registered to the Department of Registrar of Companies and Official Receiver with a Registration Number HE409708, and authorized and regulated by the Cyprus Securities & Exchange Commission (CySEC) under license number 400/21. StoneX Europe is a Member of the Investor Compensation Fund (ICF) and has its registered address at Nikokreontos 2, 5th Floor, 1066 Nicosia, Cyprus.

FOREX.com is a trademark of StoneX Europe Ltd, a member of StoneX Group Inc.

This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy.

Through passporting, StoneX Europe is allowed to provide its services and products on a cross-border basis to the following European Economic Area ("EEA") states: Austria, Bulgaria, Croatia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.

StoneX Europe Ltd products, services and information are not intended for residents other than the ones stated above.

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.