USDCAD is bottoming out after recent pullback from July highs

Following a sharp pullback from the local peak of 1.42467 set in early July, the USDCAD pair has recently found solid ground near 1.40350 due to the American dollar’s recovery on positive retail sales and labor market data. Despite these tailwinds, current levels remain far below the peaks recorded at the beginning of the month.

Meanwhile, the loonie was briefly underpinned by the Bank of Canada’s (BoC) meeting, but this impact proved to be limited. The regulator kept interest rates at 2.25%—in line with market expectations—and highlighted signs of economic recovery in the second half of the year. Given these positive developments, BoC officials softened their monetary stance on future hikes, sounding largely neutral and leaving the Canadian dollar without new, much-needed catalysts.

The USMCA revision adds another layer of uncertainty and risk. On the one hand, the United States and Mexico managed to find some common ground; on the other, talks with Canada remain at an impasse. These conditions also weigh on the loonie. However, the market appears fairly sober about future developments and does not expect any major breakthroughs in the near term—at least until the two leaders reach an agreement. For now, this is a background factor rather than a key driver.

On the technical side, USDCAD sits close to 1.40350, consolidating near the 50-day exponential moving average (EMA50) at 1.40131. The Chaikin Oscillator has recently started to climb, though still being in the red, reflecting fading bearish momentum. The Stochastic Indicator sends a similar signal: it remains in oversold territory but points to a temporary reprieve from the downtrend and the possibility of a rebound.

Consider the following trading strategy:

Buy USDCAD at the current price, with Take Profit at 1.41300 and Stop Loss at 1.39800.

The forecast remains valid from July 17 till July 24, 2026.