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USDCAD has moved out of its previous range as the CAD strengthens, with sellers taking control below the 1.4108 level, now acting as resistance. The pair has declined beneath the Red Box area, which was between 1.4238 and 1.4471 since mid-December, finding support near 1.43386 before further selling pushed it below the swing zone of 1.4149 to 1.4179 and the 50% retracement at 1.4108.
While the price stays below 1.4108, sellers remain in control; a rise above could redirect focus to the 1.4149–1.4179 area. A key downside target is the 200-day moving average at 1.3984, with a drop below this level exposing the 61.8% retracement at 1.39465.
The CAD’s recent strength follows new U.S. tariffs on Canadian goods, such as steel, aluminium, and automobiles, impacting trade relations between both countries.
Canadian Dollar Strength Driven By New Tariffs
The earlier discussion highlights a clear directional shift in the price action of the USDCAD pair. For weeks, it hovered within a defined upper range, only to break decisively below as the value of the Canadian dollar firmed. This movement, slipping under the 50% retracement level at 1.4108, suggests momentum has turned downward with more conviction than was previously seen. That 1.4108 mark, having once provided support, has now become an obstacle for any bullish recovery attempts.
With price submerged beneath that level, we view any attempts to rise as contested, particularly in the zone stretching up to 1.4179. It would require a daily close above 1.4149, at the very least, to start undercutting the current bearish pressure and call into question the broader selling narrative. Bullish attempts that don’t clear this region with strength are likely to fizzle out before gaining traction.
What’s especially worth noting now is the role of longer-term technical levels aligning with recent macro releases. The 200-day moving average, sitting at 1.3984, becomes a natural magnet if downward pressure sustains. A daily breach of this level should open the door to a deeper slide towards the 61.8% retracement at 1.39465. That’s not abstract — it’s mechanical. It’s about how markets often find rhythm following key breakdowns. These are not arbitrary lines on a chart, but areas where large orders rest, ready to either slow or accelerate price.
Key Levels Acting As Market Triggers
Following Washington’s introduction of new tariffs, not only on base metals but also on vehicles, traders have responded. The change in direction here likely reflects the broader shift in expectations for what these trade measures mean. While the headlines focus on politics, pricing tells us that the realignment of capital has already begun. For now, daily closes below that old swing zone — between 1.4149 and 1.4179 — keep those pressures intact.
In terms of approach over the coming sessions, the chart suggests that entries around weak retests of broken support could offer low-risk setups. Stops can remain tight, adjusted only if price starts to build above 1.4149 with volume and conviction. There’s no need to anticipate a reversal too early. We’ll allow price structure to develop. If it fails to reclaim key thresholds, we stick with the current direction.
We treat the 200-day average not as a forecast but a reaction area. Breaks below tend to generate wider moves, typically accompanied by momentum pick-ups and sometimes short-term dislocations. In these moments, execution becomes paramount: limit orders slipping into market orders, spreads widening temporarily. Awareness of that potential shift can be the difference between catching a move and watching it pass.
Until evidence builds that downside structure is weakening, attention remains focused on support zones being retested or softened. As always, longer tails to downside candles without follow-through can hint at buyer re-engagement, but it has to happen with consistency, not just a one-off spike.
We continue to monitor for fresh volume footprints near core support levels and remain open to reassessing our bias if pricing patterns begin to change direction methodically, not impulsively. In the current context, method beats forecast.
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