USD/CAD Price Forecast: USD/CAD edges lower within wedge as Canada rescinds tech tax

The Canadian Dollar (CAD) is gaining ground against the US Dollar (USD) on Monday after Canada announced it would cancel its planned digital-services tax on American tech companies. US President Trump had halted trade talks Friday, calling the tax “a direct and blatant attack” on US tech firms. In response, Canada rescinded the tax late Sunday to help get negotiations back on track. The move has calmed trade tensions and boosted demand for the Loonie, weighing on USD/CAD.

USD/CAD is currently trading near 1.3620 during the American session. The pair remains inside a falling wedge pattern and continues to slide lower after facing strong rejection from the upper boundary of a descending wedge pattern last week near 1.3700—a key area that also aligns with the 21-day Exponential Moving Average (EMA), which continues to act as dynamic resistance.

For any meaningful recovery to unfold, the pair must decisively break above the 1.3700 region. A daily close above this resistance would invalidate the current bearish outlook and could attract new buying interest, pushing the pair toward 1.3800–1.3850.

The failure to break above the 21-day EMA has kept sellers in control, and the price is now drifting back toward the lower boundary of the wedge. A sustained move below 1.3600 could expose the psychological support at 1.3500.

Momentum indicators continue to lean bearish. The Relative Strength Index (RSI) remains below the 50 level at 38.60, indicating weak bullish momentum. Meanwhile, the Moving Average Convergence Divergence (MACD) histogram has started to shrink after a brief recovery in mid-June, indicating that bullish momentum is weakening. While the MACD line remains above the signal line, the gap between the two is narrowing, and a bearish crossover could be on the horizon if selling pressure persists.

Until the pair breaks out of the wedge, traders can expect continued choppy movement within the 1.3550–1.3700 range, with directional conviction likely hinging on either a clear fundamental trigger or a breakout from the wedge pattern.