USD/CAD Forex Forecast and Technical Analysis: Price Tests Channel Resistance at 1.3800–1.3340

During the Asian session, USD/CAD is trading around 1.3697 amid choppy U.S. dollar dynamics and as the pair tests the upper boundary of its established channel (1.3800–1.3340). On Wednesday at 15:45 (GMT+2), the Bank of Canada is widely expected to leave its benchmark rate at 2.75%. Analysts at Bank of America Corp. note the economy is gradually recovering: the first labor market expansion since January saw 83,100 new jobs added, bringing unemployment down from 7.0% to 6.9%. Still, while headline inflation cooled to 1.9% in June, core inflation remains sticky at 3.1%, with ex-energy at 2.7%—dampening hopes for swift monetary easing.

GDP data, which slipped 0.1% in both April and May, signals ongoing economic softness through the summer. As the August 1 implementation of higher U.S. export tariffs approaches, there’s been little progress in U.S.–Canada trade talks. Barring a breakthrough, tariffs on some non-CUSMA goods are set to rise from 25% to 35%. However, Canada and Mexico retain advantages through CUSMA’s export exemptions, according to BofA Securities.

The U.S. dollar opened weaker, with the USDX at 97.40. Friday’s durable goods orders for June fell less than expected (–9.3% vs. –10.4% forecast), supporting the dollar. The FOMC meets Wednesday at 20:00 (GMT+2), and most expect rates to hold steady at 4.25–4.50%, reinforced by steady June macro data and improved trade sentiment.

Technical Levels and Chart Outlook

USD/CAD tests channel resistance

On the daily chart, USD/CAD remains close to the resistance line of its descending channel (1.3800–1.3340). Technical signals favor sellers: the Alligator indicator’s range widens downward, fast EMAs are below the signal line, and the AO histogram prints corrective bars in the negative zone.

Resistance levels: 1.3800, 1.4020
Support levels: 1.3590, 1.3340