USDCAD retreats from 1.4023 high but key support zones near 1.3955 and 1.3948-1.3966 prevent deeper correction. Traders eye USMCA trade dynamics.
USDCAD Faces Resistance After Rally to 1.4023
The USDCAD pair retreated from its highest level since 2026 on Thursday, testing critical support levels after a sharp correction from the 1.4023 peak. The currency pair has surged over 3% since early May, driven by sustained bullish momentum above its 200-hour moving average.
Buyers have historically defended the 100-hour moving average at 1.3955, while a key swing zone between 1.3948 and 1.3966 from March-April provided additional cushion. As long as the pair remains above this cluster, the technical bias favors further upside.
Key Support Levels Under Scrutiny
A break below the 1.3948-1.3966 range would shift focus to the rising 200-hour moving average near 1.3923. However, with the pair trading around 1.3973, sellers have yet to convincingly challenge the broader uptrend.
The 200-hour MA has acted as a reliable trend indicator, with the pair spending most of the rally above this level. Brief dips below the 100-hour MA have not disrupted the overall bullish structure.
USMCA Trade Dynamics Weigh on CAD
Traders remain cautious about the Canadian dollar's outlook amid lingering concerns over the USMCA trade agreement. Former U.S. President Trump's past remarks about Canada's potential statehood and his skepticism toward the deal could sustain downward pressure on the CAD.
While the pair's technicals suggest resilience, fundamental risks tied to North American trade relations may cap gains in the near term.
Implications for Traders
Active traders should monitor the 1.3955-1.3966 support zone for signs of a sustained pullback. A confirmed break below this area could open the door to further losses toward 1.3923. Conversely, a rebound above 1.4000 would reinforce the bullish bias.
Risk sentiment remains neutral, with attention split between technical levels and geopolitical developments affecting the CAD.
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