USD/CAD Price Forecast: Bearish bias persists as pair trades around 1.4000

• The five-month low at 1.3732 remains a potential downside target for USD/CAD.
• With the 14-day Relative Strength Index near 38, downward pressure appears to persist.
• At 1.4069, the 50-day EMA provides the first resistance level.

Following six consecutive days of declines, USD/CAD is holding around 1.4010 in Friday’s Asian session. A corrective retreat continues below the short- and medium-term moving averages, leaving the near-term outlook bearish. Both the 50-day and nine-day Exponential Moving Averages (EMAs) sit above the current price. This suggests that the latest fall has taken the pair below its dynamic trend support levels, which now serve as resistance.

A reading near 38 on the 14-day Relative Strength Index (RSI) signals weaker momentum and continued downward pressure, rather than clearly oversold conditions. Meanwhile, the FXS Fed Sentiment Index stands near 127, indicating a softer yet stable policy backdrop that offers little counterweight to the technical headwinds.

Further weakness could take USD/CAD towards the area around 1.3732, the five-month low reached on 21 May. Below that, support is located at 1.3481, the lowest level since October 2024.

An advance could bring USD/CAD up to its first resistance at the 50-day EMA of 1.4069, ahead of the nine-day EMA at 1.4091. A move beyond both averages would support a test of 1.4299, the 18-month high set on 14 October.

USD/CAD holds steady as IMF revisions widen the North American growth gap

The IMF’s latest growth projections point to a less favourable environment for the Canadian Dollar relative to the US, according to strategists at Societe Generale. As they put it, “with the IMF’s US growth forecast revised up to 2.5% this year (while remaining at 2.1% in 2027), the North American growth gap is widening.” The bank notes that the accompanying chart “shows relative Bloomberg consensus growth forecasts for 2027,” but adds that “the IMF’s assessment (1.2% growth in Canada next year versus 2.1% in the US) is even less favourable for Canada.” In this macroeconomic setting, Societe Generale stresses the role of interest rate spreads. It refers to “the chart on the left” showing “the two-year rate differential plotted against USD/CAD,” highlighting the continuing influence of relative growth and yield dynamics on the pair.

(The technical analysis of this story was written with the help of an AI tool. Find out more.)