USDCAD is set to fall ahead of interest rate decisions

The USDCAD currency pair is showing signs of a short-term recovery, touching the 1.37592 level after a recent correction. However, this seems to be only a tactical rebound within the current downtrend, rather than a strong reversal.

Technically, a head and shoulders pattern has formed on the daily chart, indicating a probable continuation of the pair’s decline. The neckline is near 1.37200. Breaking through this level may accelerate the bearish trend.

The Chaikin Oscillator also highlights market weakness, as it remains in the negative zone. A lack of accumulation signals sluggish interest among buyers, despite a modest increase in price.

Meanwhile, the Stochastic Oscillator (%K = 29, %D = 41) is in the lower area of neutral territory. This points to the bearish scenario as well, contradicting the current rise in USDCAD. There is no clear buy signal, but the indicator is nearing oversold conditions. Traders may use this technical setup to enter positions during short-term corrections.

Fundamentally, the US dollar remains under significant pressure. The Federal Reserve (Fed) is expected to cut interest rates as early as today. The DXY index, reflecting the strength of the American currency, has already reached July’s lows, indicating pessimistic trader sentiment. The Bank of Canada (BoC) is also poised to reduce borrowing costs, but investors are less sure about this move compared to their confidence in the US central bank’s actions. Thus, USDCAD is under pressure.

Despite being supported by the technical rebound, the recent uptick to 1.37592 seems not to have a solid foundation or ground from volume side. Given the head and shoulders pattern and a frozen state of the Chaikin Oscillator, it is advisable to sell the pair.

Consider the following trading plan:

Sell USDCAD at the current price. Take Profit: 1.36000. Stop Loss: 1.38000.

This forecast does not lose relevance from September 17 to September 24, 2025.