Recent technical indicators suggest a bearish trend for the USD against the CAD, with notable ‘engulfing’ patterns observed on daily and weekly charts. A key reversal week further supports this assessment, indicating the potential peak of the USD at 1.4795.

Despite these signals, residual bullish momentum may limit the CAD’s recovery potential. Technical resistance levels are identified at 1.4250/60 and 1.4465/00, while support is found at 1.4095/00 and 1.40, marking critical Fibonacci retracement levels.

We have observed clear directional signals that suggest downward pressure on the USD against the CAD. The presence of strong bearish engulfing patterns on both daily and weekly charts indicates a shift in sentiment. More telling is the key reversal week, reinforcing the argument that 1.4795 could mark a peak. Historically, such signals have aligned with periods of momentum exhaustion, making further upside less likely without a change in fundamental conditions.

That said, the market rarely moves in a straight line. Some strength remains in the previous USD rally, which may slow the CAD’s path to recovery. Traders should be mindful that technical resistance is clustered around 1.4250/60 and 1.4465/00. These levels previously acted as barriers to further gains and may continue to do so. On the downside, immediate support is noted at 1.4095/00, with another layer appearing around 1.40. These areas coincide with Fibonacci retracement levels, often used to gauge the depth of a correction.

What does this mean for traders? The current technical setup suggests a preference for fading rallies rather than chasing short-term strength in the USD. If price action remains below resistance, a test of lower support zones becomes increasingly probable. However, any break back above resistance could prompt a rethink. Price movements in the short term will likely be driven by shifts in sentiment rather than structural changes.

In the coming weeks, patience will be required. Trends can take time to fully develop, and false breaks are always a risk. Those looking for opportunities might focus on confirmation signals before committing to a position, keeping a close eye on whether downside momentum sustains or if dip buyers emerge to challenge it.