This week's trading landscape is shaped by a heavy slate of tier-one economic data, with CPI and PPI releases out of the US, employment figures from Australia, and UK GDP all on deck. Against this backdrop, USDCAD maintains a constructive bullish structure following a series of higher lows and a confirmed Golden Cross, while fundamentals present a mixed picture: Canada's economy remains resilient despite mounting US tariffs, and Washington's aggressive trade measures continue to inject uncertainty into global markets. Traders will be watching for data-driven catalysts that could either reinforce the pair's upside momentum or trigger corrective pressure.
Overview
This week's trading landscape is shaped by a heavy slate of tier-one economic data, with CPI and PPI releases out of the US, employment figures from Australia, and UK GDP all on deck. Against this backdrop, USDCAD maintains a constructive bullish structure following a series of higher lows and a confirmed Golden Cross, while fundamentals present a mixed picture: Canada's economy remains resilient despite mounting US tariffs, and Washington's aggressive trade measures continue to inject uncertainty into global markets. Traders will be watching for data-driven catalysts that could either reinforce the pair's upside momentum or trigger corrective pressure.
Key Economic Events
Tuesday 07:30 am (GMT+3) - Australia: Cash Rate (AUD)
Tuesday 15:30 (GMT+3) - USA: CPI m/m (USD)
Thursday 04:30 am (GMT+3) - Australia: Employment Change (AUD)
Thursday 9:00 am (GMT+3) - UK: GDP m/m (GBP)
Thursday 15:30 (GMT+3) - USA: PPI m/m (USD)
Friday 15:30 (GMT+3) - USA: Retail Sales m/m (USD)
Friday 17:00 (GMT+3) - USA: Prelim UoM Consumer Sentiment (USD)
Chart Analysis
Since establishing a low at 1.34931 on June 16, USDCAD has maintained a broadly constructive upward trajectory, characterized by a series of higher troughs. The initial shift in sentiment was signaled by the formation of a Morning Star reversal pattern, which was subsequently reinforced by a failure swing—evident as the trough at 1.35745 remained above its predecessor, followed by a decisive breakout above the resistance level at 1.37734. This sequence marked the transition toward a bullish structure and opened the door for further upside.
The bullish case was further validated by the emergence of a "Golden Cross"—a double crossover where the 20-period Exponential Moving Average (EMA) crossed above the 50-period EMA. The pair is currently trading above both moving averages, adding a note of optimism regarding short-term momentum.
Technical indicators offer supportive signals. The Momentum Oscillator remains above the 100 level, indicating underlying bullish pressure. Also, the Relative Strength Index (RSI) is above the 50 mark, suggesting intensifying buying interest.
Key Resistance Levels
Should the buyers keep market control, traders may direct their attention toward the four potential resistance levels below:
1.37734: The initial resistance level is established at 1.37734, which mirrors the swing high from July 17.
1.38784: The second price target is set at 1.38784, representing the swing high reached on August 1.
1.39717: The third price objective is observed at 1.39717, corresponding to the weekly resistance, R2, calculated using the standard Pivot Points methodology.
1.40952: An additional upside target is projected at 1.40952, reflecting the 261.8% Fibonacci Extension drawn from 1.37734 to 1.35745.
Key Support Levels
Should the sellers take market control, traders may consider the four potential support levels listed below:
1.36653: The initial support level is seen at 1.36653, corresponding to the 61.8% Fibonacci Retracement drawn from the low point, 1.35388, to the high point, 1.38784.
1.35905: The second support level is estimated at 1.35905, representing the weekly support, S2, calculated using the standard Pivot Points methodology.
1.35388: The third support level is identified at 1.35388, reflecting the trough marked on June 16.
1.34931: An additional downside target is 1.34931, mirroring the weekly support, S3, estimated using the standard Pivot Points methodology.
Fundamentals
Despite mounting US tariffs, Canada's economy has shown unexpected resilience. Economists note that while export-heavy sectors like manufacturing are feeling the strain, consumer spending and services remain stable, helping to offset broader weakness. The Bank of Canada held rates steady at 2.75%, citing modest but continued consumption growth and improved business sentiment. Analysts say slower-than-expected tariff rollouts have given businesses time to adapt, avoiding worst-case scenarios. Still, growth is expected to remain on a lower path, and risks persist—particularly if Canada's CUSMA exemption is removed in future trade escalations.
On the other hand, the United States has implemented a broad set of new tariffs—ranging from 10% to as high as 200%—on a wide spectrum of imports from major global trading partners, including the EU, Canada, India, and Brazil. Key sectors impacted include semiconductors, pharmaceuticals, and automotive components. President Trump framed the move as a strategic effort to boost domestic revenue, stating that "billions of dollars are now flowing in." While these measures may support near-term fiscal inflows and incentivize domestic manufacturing, they introduce heightened uncertainty into global trade dynamics and may provoke retaliatory action. The market response remains mixed as participants weigh the potential inflationary and supply chain implications.
Conclusion
With USDCAD holding above key moving averages and momentum indicators still favoring the bulls, the technical outlook leans to the upside. However, this week's high-impact economic releases, coupled with the lingering uncertainty from escalating trade tensions, could inject volatility and test near-term support and resistance zones. Traders should remain agile, balancing the bullish structure against the risk of data-driven reversals.