USDCAD – A “Soft Rebound” Forming at Defensive Support

USDCAD is currently caught between two weak forces. On one side, the USD is losing momentum as markets almost fully expect the Fed to cut rates soon; on the other side, the CAD isn’t strong either as Canada’s manufacturing data continues to weaken. These opposing forces neutralize each other, preventing a strong trend—but they do create room for a mild technical rebound from the current support zone.

On the H4 chart, USDCAD has slipped out of its upper consolidation range and gradually moved toward the support area around 1.3920, a level where price has reacted strongly multiple times before. The decline is slowing, with candles showing reduced volatility—signs that selling pressure is fading. Above, the zone around 1.3970, aligned with the lower edge of the Ichimoku cloud and the descending trendline, becomes a reasonable upside target for a rebound.

Preferred scenario: USDCAD may continue to test the floor near 1.3920, form a small accumulation pattern, then bounce for a light recovery toward 1.3970, possibly even sweeping slightly higher toward the cloud if USD sentiment stabilizes. However, this remains only a corrective move within a broader weakening structure. Therefore, the optimal approach is to look for short-term buys at support, take profits early at nearby resistance, and maintain strict risk management in a macro environment that remains highly uncertain.