- USD/CAD is showing bullish signs but lacks upside momentum and remains in a downtrend.
- It would have to rise more strongly and break above some key levels to indicate a reversal of the dominant bear trend.
USD/CAD is showing some bullish reversal insignia but it is still too soon to be confident that bulls are back in the driving seat.
The risks, therefore, continue to be to the downside as the bear trend remains intact. A break below the 1.3440 lows would extend the downtrend, possibly to the next target at 1.3380.
USD/CAD Daily Chart
USD/CAD formed a Two-Bar reversal pattern at the August 27 and 28 lows (rectangle on chart). This pattern indicates a short-term reversal higher. The pattern occurs at the end of a down move when a long red candle is followed by a green candle of a similar shape and size. It was followed by two small up days.
USD/CAD also broke above the trendline for the move down and this was accompanied by the Relative Strength Index (RSI) momentum indicator rising out of its oversold zone, and providing a buy signal. This adds further evidence to the possibility of a reversal evolving.
A close above 1.3520-25 would help confirm a bullish reversal and bring into doubt the validity of the bear trend. Such a break might see the pair move up to 1.3593. A move above the latter would give a surer sign of a reversal of the trend.
The recovery has been sluggish and weak so far, however, and there is every possibility the bear trend could resume. A break back down below the trendline would indicate renewed weakness. The next bearish target is situated at 1.3380 – the swing lows of October 2023 and January 2024. This is followed by the bottom of the range at 1.3222.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks

EUR/USD clings to strong gains near 1.1100 despite upbeat US data
EUR/USD trades at its highest level since early October slightly above 1.1100 in the second half of the day on Thursday. Despite the upbeat Jobless Claims data from the US, the US Dollar (USD) stays under persistent selling pressure as the Trump administration's tariff announcements feed into stagflation fears.

GBP/USD extends rally, closes in on 1.3200
GBP/USD preserves its bullish momentum and advances toward 1.3200 in the American session. The US Dollar (USD) struggles to find demand despite the better-than-expected Initial Jobless Claims data, as investors grow increasingly worried about an economic downturn on the new trade regime.

Gold slumps below $3,100 as correction from record-high picks up steam
Gold's correction from the all-time peak set at $3,167 deepens after the drop below the $3,100 mark. The precious metal struggles to capitalize on risk-aversion after US President Donald Trump's tariff decisions as investors assess a potentially worsening demand outlook.

SOL is the winner as Solana chain turns into battleground for meme coin launchpad and DEX
Solana (SOL) gains nearly 2% in the last 24 hours and trades at 118.28 at the time of writing on Thursday. A Decentralized Exchange (DEX) and a meme coin launchpad built on the Solana blockchain have waged a war for users and compete for the trade volume on the chain.

Trump’s “Liberation Day” tariffs on the way
United States (US) President Donald Trump’s self-styled “Liberation Day” has finally arrived. After four straight failures to kick off Donald Trump’s “day one” tariffs that were supposed to be implemented when President Trump assumed office 72 days ago, Trump’s team is slated to finally unveil a sweeping, lopsided package of “reciprocal” tariffs.

The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.