USDCAD in a Triangle – a breakout below 1.3665 could open the way to new lows

The USDCAD rate remains under bearish pressure amid expectations of a Federal Reserve rate cut, currently standing at 1.3717. Discover more in our analysis for 21 July 2025.

USDCAD forecast: key trading points

• The US Consumer Confidence Index rose to 61.8 points in July
• Fed Governor Christopher Waller voiced support for a rate cut in July
• USDCAD forecast for 21 July 2025: 1.3605

Fundamental analysis

The USDCAD rate is moderately strengthening, although quotes remain below the key resistance level of 1.3755. Fresh US consumer confidence data supported the US dollar, as the index climbed to 61.8 points in July from 60.7 the previous month, exceeding analysts’ average forecast of 61.5.

Americans’ one-year inflation expectations dropped from 5.0% in June to 4.4% in July, while long-term inflation projections declined from 4.0% to 3.6%, indicating easing price pressures.

Meanwhile, Fed Governor Christopher Waller reiterated support for a rate cut as early as July. He noted a slowdown in the labour market and lower inflation risks, stressing that the impact of newly imposed tariffs will be temporary. According to him, there are no signs of rising inflation expectations, which gives the Federal Reserve room to further ease monetary policy – a factor that could drive USDCAD lower as part of today’s forecast.

USDCAD technical analysis

The USDCAD rate remains within a descending channel, with quotes consolidating below the 1.3755 resistance level, suggesting ongoing bearish pressure.

Today’s USDCAD forecast points to a potential decline towards the lower boundary of the Triangle pattern, targeting the 1.3605 area. The Stochastic Oscillator confirms this dynamic: the signal lines are forming a bearish divergence and turning downwards, indicating stronger selling pressure.

A consolidation below 1.3665 would further confirm the bearish momentum.

Summary

Despite short-term support for the US dollar, expectations of a Fed rate cut increase the risk of further weakening in the medium term. Technical analysis of USDCAD highlights the potential for a decline, with a breakout below 1.3665 opening the way towards the 1.3605 level.