The pair steadied around 1.3990 on Thursday, with technicals hinting at a possible bullish breakout from a falling wedge.

USD/CAD stayed subdued for a second day, hovering near 1.3990 during European trading on Thursday. The daily chart shows the pair confined inside a falling‑wedge pattern, suggesting that selling pressure is weakening and a bullish breakout could be on the horizon.

Technical outlook

• The pair is still below the 9‑day EMA (1.4042) and the 50‑day EMA (1.4060), keeping a short‑term bearish bias.
• RSI sits around 39, indicating bearish momentum but not a deep oversold condition.
• FXS Fed Sentiment Index near 142 points, pointing to a softer policy backdrop that does not currently support a stronger CAD.

Key support and resistance levels

• Initial support at the lower wedge boundary around 1.3940; a break below could expose the five‑month low of 1.3732 and further support at 1.3481 (Oct 2024 low).
• Resistance cluster at the 9‑day EMA 1.4042, then the 50‑day EMA 1.4060, and the upper wedge edge near 1.4080. A clear break above may target the 18‑month high around 1.4299.

What traders are watching next

• Whether USD/CAD can breach the 1.4080 wedge ceiling for a bullish move toward 1.4299.
• Potential reaction if price slips below 1.3940, testing the 1.3732 low.
• Bank of Canada policy cues – the recent 25 bp hike to 2.50% was expected, but further tightening could revive CAD strength.

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This article is compiled from international market news for information only. It is not investment advice.