📘 1. Fundamental Analysis
From a fundamental perspective, the current movement of USD/CAD is still influenced by the strength of the US Dollar which remains solid, especially due to expectations that the Federal Reserve will maintain high interest rates for a longer period. The US Dollar is supported by relatively stable US economic data and has not provided a strong reason for the Fed to loosen monetary policy quickly. On the other hand, the Canadian Dollar is still weak due to the decline in crude oil prices—Canada's main export commodity—which has put pressure on the CAD. With this condition, the USD remains superior to the CAD in the short term. However, the market is also waiting for important catalysts from the release of Canadian inflation data and speeches by Fed officials next week. As long as the DXY (US Dollar Index) remains stable above 104.50 and there is no significant spike in oil prices, the upward pressure on USD/CAD is expected to continue.
2. Technical Analysis
Technically, USD/CAD is in a strong uptrend, marked by a "higher high and higher low" structure on the 4-hour timeframe. The price has broken through the resistance of 1.3925 and is now moving in the area of 1.39650. The MACD indicator shows a positive histogram that is still widening, while the RSI is in the range of 69—indicating strong bullish momentum but starting to approach overbought. ADX reaching 31 strengthens the signal that the current trend is quite solid and worth following. On the 1 hour and 15 minute timeframes, it can be seen that the price is making a minor retest after the breakout with a healthy pullback pattern. There are no signs of a significant reversal, and volume remains maintained. With this structure, the buy on pullback setup is considered the optimal scenario, with the ideal entry zone at 1.3935–1.3945.
3. Risk Management
In the risk management framework, a long position in the 1.3935–1.3945 zone has a very good risk-to-reward ratio of around 1:2.57 with the first profit target at 1.4200 and the follow-up target at 1.4050. Stop loss is placed safely below the minor support area at 1.3832 to avoid whipsaws from market noise. The probability of success based on the history of similar setups and current indicator conditions is around 79%, with a strategy confidence level above 85%. However, traders are advised to wait for confirmation in the form of a bullish candle and volume spike when the price enters the pullback zone, in order to avoid premature entry. Positions should not be executed if the DXY shows a strong bearish reversal, or if the price of WTI crude oil spikes sharply, as it could suddenly strengthen the CAD.
From a fundamental perspective, the current movement of USD/CAD is still influenced by the strength of the US Dollar which remains solid, especially due to expectations that the Federal Reserve will maintain high interest rates for a longer period. The US Dollar is supported by relatively stable US economic data and has not provided a strong reason for the Fed to loosen monetary policy quickly. On the other hand, the Canadian Dollar is still weak due to the decline in crude oil prices—Canada's main export commodity—which has put pressure on the CAD. With this condition, the USD remains superior to the CAD in the short term. However, the market is also waiting for important catalysts from the release of Canadian inflation data and speeches by Fed officials next week. As long as the DXY (US Dollar Index) remains stable above 104.50 and there is no significant spike in oil prices, the upward pressure on USD/CAD is expected to continue.
2. Technical Analysis
Technically, USD/CAD is in a strong uptrend, marked by a "higher high and higher low" structure on the 4-hour timeframe. The price has broken through the resistance of 1.3925 and is now moving in the area of 1.39650. The MACD indicator shows a positive histogram that is still widening, while the RSI is in the range of 69—indicating strong bullish momentum but starting to approach overbought. ADX reaching 31 strengthens the signal that the current trend is quite solid and worth following. On the 1 hour and 15 minute timeframes, it can be seen that the price is making a minor retest after the breakout with a healthy pullback pattern. There are no signs of a significant reversal, and volume remains maintained. With this structure, the buy on pullback setup is considered the optimal scenario, with the ideal entry zone at 1.3935–1.3945.
3. Risk Management
In the risk management framework, a long position in the 1.3935–1.3945 zone has a very good risk-to-reward ratio of around 1:2.57 with the first profit target at 1.4200 and the follow-up target at 1.4050. Stop loss is placed safely below the minor support area at 1.3832 to avoid whipsaws from market noise. The probability of success based on the history of similar setups and current indicator conditions is around 79%, with a strategy confidence level above 85%. However, traders are advised to wait for confirmation in the form of a bullish candle and volume spike when the price enters the pullback zone, in order to avoid premature entry. Positions should not be executed if the DXY shows a strong bearish reversal, or if the price of WTI crude oil spikes sharply, as it could suddenly strengthen the CAD.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.