USD/CAD price faces uncertainty near 1.4000 amid bearish retracement
USD/CAD faces downward pressure near critical 1.4000 level amid Trump tariff pledge
The USD/CAD price is currently facing downward momentum after hitting a multiyear high of 1.4180 earlier this week, driven by Trump tariff pledge on Canada and languishing oil prices.
However, as it now trades near the critical 1.4000 level, traders are closely monitoring key technical and macroeconomic conditions for near-term direction.
After spiking to 1.4180 in the Asian session on Tuesday, its highest point since 2020, the USD/CAD saw a significant decline of over 170 points. By Thursday’s European session, the price had fallen below the 50-period Exponential Moving Average (EMA) on the 4-hour chart, an indicator that suggests the bearish momentum may persist. Adding to this, the Relative Strength Index (RSI), also below the 50 mark, further supports the notion of a continued pullback.
The 1.4000 level, a psychological pivot point, now stands as a key hurdle for the bearish technical factors. If the price holds above this level, it may prevent a deeper decline. However, a break below 1.4000 would likely open the door for further downside, with the next support target seen around 1.3950. This level aligns with the 100-period EMA on the 4-hour chart and has a bullish upward trendline, making it a strong potential area for the price to find support.
USD/CAD outlook leans bullish on US data
In the background, US economic data has been resilient, showing signs of a still-strong economy. This has bolstered the USD, with Treasury yields rising and the USD Index reversing its previous slide. Geopolitical risks are also lending support to the safe-haven US Dollar, benefiting the USD/CAD pair. At the same time, crude oil prices, a key influence on the Canadian Dollar, have been sluggish, weighed down by concerns over slowing demand growth in the US and China
Given today's Thanksgiving holiday in the US, low trading volumes are dampening market activity, yet the outlook for USD/CAD seems tilted to the upside. Any further corrective declines towards the 1.4000 zone may present buying opportunities, but breaking this support would expose deeper downside potential.
The Loonie witnessed price retreat amid Trump's aggressive rhetoric. Meanwhile, the aggressive trade policies of the new US administration toward its neighbors, favor a bullish trend for the USD/CAD pair.
