USDCAD has recently dropped to a new low for 2025 after breaking through important technical levels. It went below the previous low from October 2024 and reached a support level around 1.36443. This support point aligns with a rising trend line that has been in place since late 2023. On the hourly chart, last week, attempts to break past the 50% retracement of the May decline at 1.38505 were unsuccessful, leading to a downward trend. As sellers pushed the price below the 100-hour moving average, the market maintained a bearish outlook, causing further declines by the end of the week.

Key Turning Point

Early attempts to rise were stopped near a previously broken swing area, which brought back selling pressure. Consequently, USDCAD hit a fresh low for the year, briefly dipping below 1.3685. However, this drop was short-lived, suggesting that traders might be uncertain about their next moves. The 1.3685 level is now crucial. A significant move below it could strengthen the downward trend, while holding above could attract buyers and trigger a rebound. This situation highlights the delicate balance between ongoing bearish pressure and the chance for recovery. Recent trends show that momentum has shifted towards sellers. The break below last year’s October low marks a change from the rising patterns that supported the pair since late 2023. This drop to a support zone around 1.3644 has weakened what used to be a strong foundation. That said, the response around 1.3685 is noteworthy. After breaking this level—though only temporarily—the price struggled to stay below, which can often indicate uncertainty in the market. Such failures at new lows can serve as cautionary signals, especially when momentum fades. While sellers currently dominate, there may be hesitation to push further without clearer incentives. Wednesday and Thursday’s price movements highlighted this uncertainty. There were multiple attempts to regain ground above key short-term levels, particularly last week’s mid-level retracement at 1.3850. This level has consistently limited rebound attempts, indicating that buyers are hesitant to act without clearer signals. For market dynamics to shift, we need confirmations of both a high and a low, which are absent right now.

Current Market Dynamics

Currently, we are measuring any moves against the 1.3685 line. This level is acting like a magnet—when prices hover around it without committing to new moves, it shows grappling indecision. Traders should watch for strong closes above or below this number. If the market breaks down again into the 1.36s, we will focus on areas around 1.3595, possibly reaching into late 2023 pivot zones. Volume patterns are also crucial. There hasn’t been strong activity from either side, which affects the reliability of shallow breaks. It’s wise to be skeptical of any price increases that lack solid support, especially since the overall trend continues showing lower highs. One could argue that the longer the market remains stuck in this range, the stronger the reaction will be. Whether it leads to another downward move or the anticipated snapback rally, the energy around these levels is unlikely to fade quietly. The pair’s past behavior highlights its reluctance to respect retracement levels, adding conviction to this perspective. From a momentum viewpoint, we are observing the hourly moving averages. The 100-hour and 200-hour lines currently allow for downward movement, particularly as sellers have rejected several attempts to retest these levels. Until that situation changes, no strong pressure is pushing for a shift in trend. Volatility is relatively low, making future developments even more significant. An increase in price range, combined with a break in recent hourly structures, could lead to more substantial technical action. We note that such compression often foreshadows trend acceleration. In quieter periods like this, we remain cautious yet flexible. We assess opportunities not just based on recent trends but also by analyzing the strength displayed at every decision point on the chart. Create your live VT Markets account and start trading now.

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