Sellers Exhausted After Downward Correction, Paving the Way for a Renewed Bullish Move

Forex

Economic

Summary:

This fast decline in the RSI is disproportionate compared to the actual price action, indicating that the bears are quickly losing control.

BUY USDCAD

EXP

TRADING

1.41560

Entry Price

1.42480

1.41000

1.41312 -0.00240 -0.17%

0.0

Pips

Flat

1.41000

Exit Price

1.41560

Entry Price

1.42480

The geopolitical situation in the Middle East remains a major source of uncertainty for financial markets. Tehran's attacks against commercial vessels triggered a military response from the United States, whose Central Command (CENTCOM) confirmed operations against more than 100 targets linked to Iranian forces in the vicinity of the Strait of Hormuz.

Subsequently, Iran expanded its actions toward Gulf countries hosting U.S. military bases and announced the closure of the Strait of Hormuz to oil tanker transit. This fresh escalation has driven energy prices higher, fueled by concerns that disruptions to the global crude supply could materialize.

In parallel, investors continue to assess the outlook for U.S. monetary policy. Federal Reserve Governor Christopher Waller noted that a persistently high core inflation reading could justify a rate hike in the short term. Nonetheless, he also highlighted that achieving the 2% inflation target remains possible without additional monetary policy tightening, supported by a labor market that stays close to the maximum employment levels sought by the Fed.

In Canada, market consensus continues to indicate that the Bank of Canada (BoC) will keep interest rates unchanged for the remainder of the year, though it retains room to implement cuts if inflation continues to moderate.

However, uncertainty surrounding trade negotiations in North America continues to pose a risk to the economic outlooks of Canada and Mexico. This factor, combined with the recent strength of the U.S. dollar, continues to cap the performance of the Canadian dollar in the short term.

Even so, some indicators suggest a gradual improvement in the Canadian economic landscape. Fears of a recession have diminished in recent months, while expectations of a growth recovery during the second quarter and the resilience shown by full-time employment offer encouraging signals for economic activity. Sellers Exhausted After Downward Correction, Paving the Way for a Renewed Bullish Move_1

Sellers Exhausted After Downward Correction, Paving the Way for a Renewed Bullish Move_1

Technical Analysis

From a technical perspective, we can see that USDCAD found support at the 1.4124 level, from which it reacted upward once again. Consequently, we could see a renewed bullish impulse that could retest the local peak and resistance at 1.4248. Meanwhile, the 100 and 200-period moving averages are located at 1.4191 and 1.4063, respectively; a recovery back above the 100-period moving average could accelerate the upward move toward the resistance zone.

Looking at the oscillators, the RSI dropped rapidly to the 32 level, drawing near oversold territory. This fast decline in the RSI is disproportionate compared to the actual price action, indicating that the bears are quickly losing control. Meanwhile, the MACD displays a histogram that has just crossed to the upside, while the signal lines hover slightly below the neutral zone. Therefore, a recovery from this area would add further confirmation to the bullish move.

Trading Recommendations

Trading direction: Buy

Entry price: 1.4157

Target price: 1.4248

Stop loss: 1.4100

Validity: Jul 24, 2026 15:00:00

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Sellers Exhausted After Downward Correction, Paving the Way for a Renewed Bullish Move

Technical Analysis

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