USDCAD keeps its downside potential on fading upward move

After reaching a peak of 1.42467, USDCAD began to decline. However, today’s unclosed candlestick points to buyers’ attempt to rebound from the key exponential moving average.

Keep an eye on the 20-day EMA (1.41345), as it has gained extra importance. The pair has just tested this level and managed to settle above it, helping bulls to stay afloat locally. The proximity of the EMA20 and the narrowing volatility range reveal investors’ indecisiveness. While USDCAD sits above this critical threshold, the upper boundary of the flat channel between 1.42000 and 1.42400 could be retested. However, this scenario would be invalidated, if the pair broke below the moving average, potentially shaking up the local balance of power.

The Relative Strength Index (RSI) fell to 46 upon reaching overbought territory—another signal of waning bullish momentum and the gradual awakening of bears, though the indicator remains far from the oversold zone. At the same time, the Average True Range (ATR) keeps declining, suggesting lower volatility, which is quite typical of a consolidation phase. Such a contraction of the range often precedes a new directional move.

The technical setup suggests that buying momentum has completely exhausted itself. Shrinking volatility and neutrally bearish signals from the RSI hint at either a further drop or prolonged flat trading. USDCAD’s position above the EMA20 looks fragile, and once bulls loosen their grip, this threshold is likely to be breached in the coming trading sessions.

The fundamental landscape is murky. The loonie is trying to find solid ground thanks to rising exports and improving economic data. However, the unabated conflict between the United States and Iran continues to trigger energy price spikes and support the Federal Reserve’s (Fed) hawkish posture—both of which favor the greenback. As a result, neither currency holds a clear advantage, creating an even more volatile environment.

Try out the trading plan down below:

Sell USDCAD in anticipation of a breakout through 1.41345. Place Take profit at 1.40600 and Stop loss at 1.42050.

The forecast remains relevant between July 10 and July 17, 2026.