USDCAD is poised to test six-month high at 1.417

The USDCAD currency pair ended October with an attempt to break down from its medium-term upward channel. However, buyers of the US dollar were stronger than those of the Canadian currency, and the price rebounded from the lower limit. The pair reached a new six-month high during yesterday’s trading session, climbing above the 1.41 level. There is still room for further growth within the channel, with bulls likely targeting 1.417 next. This threshold acted as support in February.

A golden cross formed on the USDCAD daily chart at the end of last month, as the 50-day moving average pierced through the 200-day one from below. A similar signal in October 2024 heralded a three-month rally from 1.38 to 1.479. The current technical setup suggests a similar scenario may unfold. The RSI remains in the area of average values and will only reach overbought territory after the price approaches 1.417.

The ongoing US government shutdown is making the publication of new economic statistics more challenging. As a result, traders’ attention is glued to fresh statements from Fed officials. Following last week’s rate cut, US policymakers seem less certain about their next move. There is a 30% likelihood of borrowing costs remaining unchanged at the regulator’s December 10 meeting—a huge difference from the near-zero chances in September and October.

At the same time, the Bank of Canada (BoC) is likely to continue easing monetary policy. The budget plan for 2026, presented yesterday, gives the regulator less room to maneuver, as the deficit is projected to almost double, reaching 78.3 billion Canadian dollars. Concurrently, the outlook for the country’s GDP growth has significantly worsened—from 1.7% to 1.1% for 2025 and from 2.1% to 1.2% for 2026. This is a clear sign that Donald Trump's tariffs are negatively impacting Canada's economy.

Consider the following trading strategy:

Buy USDCAD at the current price, with Take profit at 1.417 and Stop loss at 1.405.