USDCAD under pressure: sellers poised to break support level

The USDCAD rate continues to decline for the second consecutive trading session, currently trading at 1.3790. Discover more in our analysis for 5 May 2025.

USDCAD forecast: key trading points

• Canada’s economy showed moderate growth in March
• Strong macroeconomic data strengthened confidence in Canada's resilience
• Investors are focused on the upcoming Federal Reserve meeting
• USDCAD forecast for 5 May 2025: 1.3685

Fundamental analysis

The USDCAD rate declines as sellers increase pressure on the 1.3775 support area, anticipating a potential breakout. The US dollar remains under pressure amid persistent uncertainty in trade relations with China, which fuels investor caution.

Meanwhile, Canada's economy posted moderate growth in March despite falling prices for key export goods and lingering pessimism over US trade tensions. These results reinforced the view that Canada remains relatively resilient even when the US economy weakens.

Markets have also shifted focus to the upcoming Federal Reserve meeting. The Fed is expected to leave interest rates unchanged. However, a stronger-than-expected April employment report has reduced the odds of a rate cut in June.

USDCAD technical analysis

The USDCAD pair continues to trade within a descending channel. The price bounced off the EMA-65, signalling increased selling pressure. Today’s USDCAD forecast suggests a further decline towards 1.3685. The Stochastic Oscillator supports the bearish outlook, with a crossover of the %K and %D lines pointing to a potential near-term drop. A breakout below the 1.3745 support level would reinforce the downward scenario.

Summary

Canada’s moderate economic growth, combined with expectations that the Fed will hold rates steady, is weighing on the USDCAD rate, increasing the likelihood of further declines. The USDCAD technical analysis also points to a bearish continuation, with a breakout below the 1.3745 support level likely to pave the way for a drop to 1.3685.