First Light: USD/CAD Hovers Around 1.407

Summary:

The trade negotiations the United States is conducting separately with Canada and Mexico are putting the framework of the U.S.-Mexico-Canada Agreement, which has been in effect for 32 years, to the test.

BUY USDCAD

EXP

TRADING

1.40647

Entry Price

1.45000

1.38000

1.40696 -0.00166 -0.12%

0.0

Pips

Flat

1.38000

Exit Price

1.40647

Entry Price

1.45000

Fundamentals

There is widespread support within Canada for the government to maintain a firm stance. Carney stated that the provinces should only consider resuming the sale of U.S. alcoholic beverages after a broader U.S.-Canada trade agreement is reached. Currently, with the exception of Alberta and Saskatchewan, most provinces continue to restrict the sale of U.S. alcoholic beverages. Provincial premiers are generally opposed to the latest U.S. tariffs. Ontario advocates for “tit-for-tat” retaliatory measures, British Columbia has made it clear it will not restock U.S. alcoholic beverages, while Saskatchewan is calling for continued efforts to strengthen negotiations with the United States.

The market generally expects that the probability of a rate hike at the Federal Reserve’s meeting next week remains low, but interest rate futures indicate that investors anticipate at least one more 25-basis-point hike before year-end, further raising the current policy rate range of 3.50% to 3.75% to address inflationary pressures that continue to exceed expectations. Meanwhile, the yield on the 10-year U.S. Treasury note—which has the greatest impact on mortgage rates—has risen by more than 25 basis points since late June and has reached a nearly two-month high, further driving up U.S. housing financing costs.

Technical Analysis

Looking at the USD/CAD on the 4-hour chart, the Bollinger Bands are widening upward, and the moving averages are diverging upward, suggesting a potential rebound to around 1.42. The RSI stands at 44, indicating the market has entered the bearish zone. On the daily chart, the Bollinger Bands are narrowing, moving averages have flattened, and following a MACD death cross, the fast and slow lines have pulled back to near the 0-line, suggesting a potential trend reversal at any moment. With the RSI at 46, the market sentiment remains predominantly bearish. Strategically, look to buy on dips.

First Light: USD/CAD Hovers Around 1.407_1

First Light: USD/CAD Hovers Around 1.407_2

Trading Recommendation

Trading Direction: Buy

Entry Price: 1.406

Target Price: 1.45

Stop-Loss Price: 1.38

Support Levels: 1.39, 1.38, 1.37

Resistance Levels: 1.42, 1.45, 1.48

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First Light: USD/CAD Hovers Around 1.407

Risk Disclosure