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The USD/CAD weekly forecast indicates an improving outlook for Canada’s economy, which escaped Trump’s reciprocal tariffs.

Ups and downs of USD/CAD 
 

The USD/CAD pair collapsed this week as Trump’s tariffs caused a widespread sell-off in US assets. The dollar weakened after Trump imposed a reciprocal tariff on most of the US’s trading partners. Analysts moved to predict a likely global recession that sent most investors to safe-haven currencies. The loonie gained because Canada again escaped new US tariffs, easing worries about Canada’s economy. 

Although Trump paused these tariffs for ninety days, those on China increased. The trade war between the two largest economies weighed on the dollar. Moreover, downbeat US inflation figures increased Fed rate cut bets.

Next week’s key events for USD/CAD 
 

Next week, traders will focus on Canada’s inflation figures. After a previous reading of 1.1%, economists expect inflation to ease to 0.7%. An unexpected surge would lower BoC rate cut expectations. Meanwhile, soft figures would increase rate-cut bets, hurting the loonie.

Additionally, analysts expect the Bank of Canada to keep interest rates unchanged during Wednesday’s meeting. Meanwhile, the US will release its retail sales report, which will show the state of consumer spending and demand.

USD/CAD weekly technical forecast: Sharp could pause at the 1.3802 support
 

USD/CAD daily chart
 

On the technical side, the USD/CAD price has finally broken out of its consolidation. For a long time, it was trapped between the 1.4200 support and the 1.4502 resistance levels. The previous bullish trend paused, and the price started moving sideways with no clear direction. Meanwhile, the RSI was declining, showing bulls were losing momentum. 

Eventually, the price broke below the range, supported by a strong candle. It pulled back to retest the SMA before collapsing in a steep move. Bears are targeting the next hurdle at the 1.3802 support level. The decline might pause briefly at this level as the SMA catches up. 

However, the bearish bias is strong, with the RSI heading for the oversold region. Therefore, bears might eventually break below 1.3802. Such an outcome would clear the path to the 1.3400 key support. The downtrend will continue as long as the price trades below the SMA, with the RSI under 50.

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