USD/CAD Rate Drops Towards Yearly Lows

The USD/CAD chart is currently showing clear signs of a bearish trend, characterised by a sequence of lower highs and lower lows (A→B→C→D→E→F→G).

This week’s decline suggests the downward structure may continue to develop, putting the current yearly low around the 1.3770 level at risk.

Why Is USD/CAD Falling?

On one hand, the US dollar remains under pressure:

→ Following last week’s downgrade of US debt ratings by Moody’s, investor attention has shifted to the country’s $36 trillion debt burden.

→ A tax bill backed by Donald Trump — recently passed in the Republican-controlled House of Representatives — could add trillions more to the national debt. Market participants may be increasingly concerned about the US’s fiscal outlook, prompting a shift towards safe-haven assets.

On the other hand, the Canadian dollar has strengthened this week relative to other major currencies. Tuesday’s CPI figures from Canada came in above analysts’ expectations and may be seen as a sign that the inflation surge could delay any potential rate cuts by the Bank of Canada.

USD/CAD Technical Analysis

In early May, we outlined a descending channel on the USD/CAD chart — a structure that remains relevant today.

The current price is hovering near the channel’s median line, which could indicate a temporary balance between supply and demand. However, with Canadian retail sales data due at 15:30 GMT+3 today, the risk of increased volatility remains high. A new weekly low cannot be ruled out.

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