USDCAD ready to roll back after US inflation data release

The USDCAD pair opened at 1.37648 today (August 13) and has been rising during morning trading, supported by Canadian dollar weakness amid declining oil prices. Brent crude is currently hovering around $66 per barrel, while the EIA's long-term forecast suggests a potential drop to $50 by 2026. Since Canada is a major oil exporter, this downward pressure on energy prices is preventing USDCAD from falling, even as disappointing economic data in America weighs on the dollar.

The greenback continues to face challenges following the latest US inflation report on August 12, which showed an annual CPI growth at 2.7% and a stagnant monthly reading of 0.2%, falling short of investor expectations. This has reinforced market bets on a Fed rate cut in September, with CME FedWatch now pricing in a 94–98% probability of monetary easing.

A stronger-than-expected US inflation report in August or waning market confidence in a September borrowing cost reduction could trigger a rapid dollar rebound. Conversely, weak employment data would likely put downward pressure on the currency.

Market attention now turns to the Trump-Putin talks on August 16, where traders will watch for any signals on potential easing of Russian oil sanctions. However, given previous negotiations, such an outcome appears unlikely and might have limited impact on the Canadian dollar (CAD) as investors have largely priced in this scenario.

The current rally is showing signs of exhaustion. The RSI is hovering at 71, which is deep in overbought territory, while the price is struggling near the 1.37768 resistance level. This technical setup, combined with July's failed breakout from the consolidation channel, suggests growing risks of a pullback. The convergence of overextended momentum indicators and key resistance levels raises the chances of an impending corrective move.

Here's a trading strategy to consider:

Sell at the current price. Take profit: 1.36800. Stop loss: 1.37960.

This forecast is valid from August 13 to August 20, 2025.