Bearish mood on USDCAD strengthens against background of possible exit beyond triangle consolidation

The USDCAD currency pair shows a moderate recovery on Wednesday after a strong decline in the previous session. The latest decline occurred amid pressure on the US dollar following the publication of weak data on the manufacturing sector, coupled with uncertainty surrounding upcoming tariff measures from the administration of President Donald Trump.

The ISM's index of business activity in the US manufacturing sector fell to 49.0 points in March from 50.3 in February, below market expectations of 49.5. A reading below 50 indicates a contraction in sector activity.

An additional source of uncertainty in the markets came from Trump's comments announcing the imposition of new duties as part of the so-called ‘Liberation Day’ on April 2. As confirmed by the White House, the tariff measures will come into effect immediately after their publication. However, the lack of specifics on the scale, scope, and calculation mechanism of the tariffs creates a downside risk for the dollar in the short term.

Today, the markets are also anticipating the release of the ADP employment report, and on Friday, the official US Nonfarm Payrolls data. These indicators could influence investor expectations regarding Federal Reserve monetary policy.

From a technical perspective, USDCAD quotes demonstrate market uncertainty in the form of a rectangular triangle on the H4 chart. The current market dynamics suggest a possible continuation of the pair's downward movement. The Bears and Bulls Power indicators show weakened 'bullish' activity, while 'bearish' volumes remain in the negative zone.

The base scenario implies a price decline to the triangle support, which, if broken, may increase momentum. The alternative plan implies a rebound from the support at 1.4235 with upward dynamics within the uncertainty figure.

Signal:

The short-term outlook for the USDCAD suggests selling.

The target is at the level of 1.4150.

Part of the profit should be taken near the level of 1.4235.

The stop-loss could be placed at the level of 1.4430.

The bearish scenario is short-term, so a trading volume should not exceed 2% of your balance.