USDCAD consolidates as US-Canada trade talks ramp up

The USDCAD pair has been volatile since breaking out of a sideways channel. The price is now range-bound between 1.39400 and 1.39700. Buyers are attempting to gain a foothold higher, but they are facing strong resistance from sellers at 1.39700. A consolidation phase is forming on the daily chart, with purchasers being unable to break through a key barrier.

Technical indicators present a mixed, yet cautious picture. The Stochastic Oscillator is in neutral territory, generating a weak bearish signal as its %K line (43) has crossed below the %D one (52). This suggests a short-term loss of bullish momentum. Conversely, the RSI points to overbought conditions and heightened correction risks after touching 80. The Chaikin Oscillator remains in the negative zone, which means there's still selling pressure, but it is easing off a bit. Therefore, while the market has underlying upward potential, it may require a pause or slight retreat to gather strength for its next sustained move.

Fundamental drivers exert conflicting pressures on the Canadian dollar. A widening trade deficit and ongoing US tariffs continue to weigh on the CAD. Meanwhile, a recent meeting between the two countries' leaders yielded no major breakthroughs, sustaining market uncertainty. The price of oil, a critical Canadian export, is a big deal. Although crude has seen recent gains, forecasts of a new global commodity glut in the medium term are curbing prospects for any substantial strengthening of the currency.

Taking a technical and fundamental approach, the most probable scenario for the pair before October 15 is an attempt to break out above 1.39700. However, due to overbought RSI conditions and low trading volumes, such a move could be followed by brief pullbacks. The primary target for buyers is the psychologically significant level of 1.40000. If selling pressure intensifies, the price could retreat toward the 1.39200 support—the boundary of the previously broken channel—or even down to 1.38750.

Here's a trading strategy to consider:

Buy USDCAD when it corrects within the 1.39200–1.38750 range. Take profit: 1.4000. Stop loss: 1.38450.

This forecast is relevant between October 8 and October 15, 2025.