The USDCAD currency pair is now flying near 1.42000, remaining close to its 18-month peaks. A slight correction after the recent rally has not changed the fundamental picture, which continues to favor the US dollar.
As for the loonie, its key struggle is the slowdown in business activity. In September, Canada’s Services Purchasing Managers’ Index came in at 48.3, staying below the critical 50 threshold for the fourth consecutive month. Meanwhile, the Manufacturing PMI dropped from 53.0 to 51.50, hinting at a decline in the sector’s activity. This deteriorating economic data is hardly what investors want to see, which explains why the Canadian dollar is now losing favor.
Persistent trade tensions between the two neighbors do not make the situation better and keep the Great White North under significant pressure. US import tariffs increase costs for Canadian exporters and create business uncertainty. As a result, companies face the risk of reduced foreign demand and slowing investment—both of which weigh on the loonie’s outlook.
In contrast, the American economy remains far more robust. Last month, the US Service ISM PMI hit 54.9, confirming steady growth. Another positive signal came from initial jobless claims dropping to 197,000, pointing to an absence of large‑scale layoffs and supporting expectations of resilient domestic demand.
On the technical side, USDCAD continues to move within an uptrend. A prolonged rally has led the pair to the resistance zone between 1.42500 and 1.43000, triggering a local correction aimed at easing overbought market conditions. Once the situation has fully stabilized, quotes could jump to 1.45000.
The overall recommendation is to buy USDCAD at the current price of 1.42000, targeting 1.45000 within one month. To mitigate the risk of adverse market movements, place a Stop Loss order at 1.37300.
This content is for informational purposes only and is not intended to be investing advice.
