USDCAD poised for renewed gains after local correction

Despite a brief pause on Wednesday that gave bulls a moment to catch their breath, the USDCAD pair continues to march higher. What's driving it? The White House's decision to impose 50% tariffs on a wide range of Canadian goods—a move that casts a long shadow over the Great White North's export outlook and keeps the loonie firmly on the back foot.

Wednesday's session saw a flicker of hope for the CAD, as news of a potential 10-day ceasefire between the United States and Iran briefly cooled safe-haven demand for the greenback. But don't be fooled—this relief proved to be fleeting. Oil prices remain elevated amid ongoing Middle East tensions, and the risk of supply disruptions keeps inflation fears alive—sending investors back to the American dollar for shelter.

Taking a step back, the fundamental stars are aligning for further USDCAD gains. Soft Consumer Price Index (CPI) data has all but cemented expectations that the Bank of Canada (BoC) will stay on hold until year-end—robbing the loonie of any rate-support advantage. On the flip side, the Federal Reserve's (Fed) hawkish tone, reinforced by mounting inflation concerns, continues to bolster the greenback and sets the stage for the uptrend to resume once the current pause has run its course. 

Technically, the market is taking a breather, with a red candle forming near 1.41048. The Stochastic Oscillator, now hovering just below overbought territory, along with the bearish candle body, sends a clear warning: buying interest is waning, and a local correction may be on the horizon. Yet, this is not a trend reversal—it is a healthy shakeout. A dip like this would create an attractive entry point for buyers looking to capitalize on the ongoing rally, fueled by the widening rate differential and persistent tariff pressure on the Canadian dollar.

For those ready to get in, pay attention to the trading plan down below:

Buy USDCAD from 1.40820. Place Take profit at 1.41660. Set Stop loss at 1.40200.

This forecast holds true from July 22 till July 29, 2026.