USDCAD goes lower as US economy loses steam

The USDCAD pair has stepped back from the four-month highs it touched last week, with prices now hovering near 1.3915. Such a move was sparked by growing hopes that the Middle East situation might finally be defusing. The Trump administration suggested it could wind down its active operations in Iran within two to three weeks, which caused traders to rethink their demand for the dollar as a safe haven. Some market players wasted no time in cashing in profits on long greenback positions.

Adding to the American currency's woes, softening US labor market data took another bite out of its value. February saw job openings shrink more than anticipated, while the hiring rate plummeted to its lowest level since 2020. In fact, the message is clear: the country's economy is cooling faster than anyone expected. All eyes are now on Friday's March employment report—a weak print could fuel speculation about a Federal Reserve (Fed) interest rate cut, piling even more pressure on the beleaguered dollar.

Across the border, however, the story takes a different turn. Canadian macroeconomic data is holding its ground. January GDP defied expectations, eking out 0.1% growth when analysts had predicted a flat reading. February's preliminary estimates suggest even better things may be on the horizon, with a possible acceleration to 0.2%. Mining and construction led the charge, helping to offset lingering softness in manufacturing. Therefore, the Bank of Canada (BoC) has little reason to rush into monetary easing, which means the loonie isn't feeling the same weight dragging down its American counterpart. 

Technically, the charts are telling a bearish story. USDCAD has recently hit a local high and is now showing signs of exhaustion. A classic "shooting star reversal" pattern emerged on the last trading day of March, and today, the pair is hovering near its opening level—a telltale sign of hesitation creeping into the market. The Chaikin Oscillator backs up the story: after reaching a local peak on March 30, it reversed course, signaling that buying volume is evaporating and capital may be quietly slipping out the back door.

For those looking to take action, here is the trading plan:

Sell USDCAD at the current price. Place Take profit at 1.3840. Set Stop loss at 1.39500.

This forecast is valid from April 1 till April 8, 2026.