Breaching 1.373 support paves way for USDCAD drop to 1.358

The USDCAD currency pair continues to ride down following November’s “double top” pattern on the daily chart, in line with our previous predictions. Last week, quotes hit a strong support level at 1.373. Sellers loosened their grip there. Bulls attempted to rebound from this threshold but failed. Eventually, on December 23, bears seized the initiative and pushed the price under 1.373. They are now targeting 1.358 and summer lows.

A “death cross” pattern emerged after yesterday’s drop in USDCAD, with the 50-day exponential moving average piercing through the 200-day one down below. Meanwhile, the Stochastic Oscillator keeps supporting the bearish sentiment, forcing investors to take the pair off their hands. The RSI Indicator, on the other hand, is just an arm’s length away from oversold territory, meaning that the current decline could slow. However, this is not necessarily bad news, as sellers may strive for a little break after digging below 1.373. Furthermore, market liquidity typically falls during Christmas holidays.

Interestingly, the greenback is now losing ground even amid resilient economic statistics. Yesterday’s GDP data for the third quarter (Q3) showed an increase of 4.3%, which significantly exceeded expert forecasts of 3.3%. These positive readings, however, proved nothing to US President Donald Trump. The politician once again stated that current interest rates are too high. He also said that intends to appoint a more dovish Federal Reserve (Fed) Chair next year.

Unlike the Fed, the Bank of Canada (BoC) is under less pressure, allowing officials to consider a wider range of options for future monetary policy. The minutes from the BoC’s latest meeting, released on December 23, revealed that any move is possible, whether up or down. Analysts polled by Reuters expect the central bank to raise interest rates in October 2026. Until then, borrowing costs are projected to remain unchanged. Such forecasts make short positions on USDCAD increasingly attractive.

Keep in mind the following trading plan:

Sell USDCAD below the 1.37 level, with Take profit at 1.358 and Stop loss at 1.373.