USDCAD is declining due to halt in new tariffs against Canada

USDCAD is currently trading near 1.38800. The pair has recently been impacted by the temporary suspension of fresh tariffs on Canadian goods. The sides managed to reach an agreement on Tuesday, reducing market uncertainty and underpinning the loonie.

Canada’s latest inflation data is another pillar of support for the national currency, keeping the central bank on alert. July’s figures came in above expectations and jumped to 3%, leaving the regulator with little choice but to maintain a hawkish stance.

The US dollar, by contrast, is now weighed down by sluggish macroeconomic statistics. Traders have recently revised their expectations regarding the Federal Reserve’s (Fed) future monetary path following last month’s unexpected job losses, moderate inflation readings, and lower retail sales. Market players appear increasingly confident that interest rates will remain unchanged in September. Today’s release of the FOMC meeting minutes could reinforce this scenario, limiting the dollar’s recovery potential.

Rising global bond yields and trade uncertainty continue to fuel volatility. Nevertheless, the US dollar remains broadly unsupported. A pause in restrictions against Canada gives the loonie some breathing room. Meanwhile, weak economic reports from America, combined with looming hopes that the Fed will maintain borrowing costs at the same level, are capping the USD’s upside.

On the technical side, the pair is now hovering near the daily floor of 1.38790 within a broader downtrend that has been in place since early July. The declining trendline—marked by falling local lows—serves as key dynamic support at 1.38430. USDCAD is currently sitting just above it. The Relative Strength Index (RSI) stands at 29, close to oversold territory—a clear sign that bearish momentum is waning, although the overall trend remains negative.

Try out the following trading strategy:

Sell USDCAD at the current price of 1.38800. Place Take profit at 1.38200. Set Stop loss at 1.39350.

The forecast remains valid from August 19 till August 26, 2026.