USDCAD is in short-term consolidation before going down again

The USDCAD pair tried to consolidate or climb a bit higher during early trading today following its recent slump. The price has managed to rebound from the intraday low, currently attacking the 1.36100 level. This move does not negate a broader bearish sentiment but signals the pair’s attempt to find solid ground for a while.

Fundamentally, such a decline is linked to the US dollar’s fragility due to a confidence crisis. In 2025, the greenback depreciated by almost 9%. The same pessimistic tune is still playing in the market, as the American currency lost another 2.3% this January. President Donald Trump’s reckless comment that USD “is doing great” has further fueled the selloff. US trade policy is now often characterized as a roll of the dice. Along with tireless accusations against the Federal Reserve (Fed) and dizzyingly increasing spending, this fact is driving capital away from American assets. Hedging has recently become the prevailing market theme.

Technically, Bollinger Bands are signaling potential exhaustion. USDCAD is currently trading at 1.35839, below the lower band (1.36218), which indicates oversold conditions and raises the likelihood of a corrective bounce.

The Chaikin Oscillator also hints at a potential near-term reversal. Its lines, with %K at 21 and %D at 27, are near oversold territory. Their relative positioning formally supports the bearish trend, but the proximity to the 20 level creates conditions for a possible bullish pivot.

In summary, the technical setup favors a corrective bounce toward the 1.3620–1.3700 range, which aligns with the lower Bollinger Band. However, sellers remain alert, waiting for a renewed decline from the resistance zone between 1.3650 and 1.3700. The first downside target is set at 1.3500, and the next one is placed at 1.3450. Given the fundamental weakness of the dollar, upcoming central bank decisions, with rates likely to remain unchanged, and the overall technical landscape, the best strategy is to sell the pair on rebounds.

Take a look at the trading plan presented below:

Sell USDCAD when it climbs to the 1.3650–1.3700 range. Take profit: 1.3500. Stop loss: 1.3750.

The forecast remains relevant between January 28 and February 4, 2026.