USD/CAD softens after Canada GDP miss; 1.3937 pivot in focus as sellers cap rebounds
The Canadian dollar strengthened on the headlines as USD/CAD fell despite a weaker-than-expected Canada GDP print, with the pair rebounding off a key 50% retracement before sellers reasserted control below nearby resistance. Traders are watching 1.3937 as the next decisive pivot.
Price action: support holds, rebound fades
USD/CAD slumped on Friday after Canada’s GDP undershot forecasts, a counterintuitive move that underscores choppy FX positioning into month-end. The decline stalled just above the 50% retracement of the mid-September to early-November rally at 1.39367, with Friday’s low printing at 1.39374. That level attracted dip-buying and sparked a rebound into the European morning today, briefly tagging 1.3991.
The recovery proved short-lived. The pair slipped back under a well-watched swing zone at 1.3968–1.3975 and the broken 38.2% retracement at 1.39847. Staying below that band keeps the near-term bias tilted lower, with momentum likely to build if 1.3937 gives way.
Why it matters for FX
Friday’s move highlights how technicals are steering intraday flows in USD/CAD as macro signals send mixed messages. Softer Canadian growth would normally weigh on the loonie, but the pair’s inability to reclaim the 1.40 handle points to ebbing USD momentum and cautious risk appetite. Liquidity is thinning into the first week of the month, which can amplify swings around clear chart levels.
Levels that matter
- Resistance: 1.3968–1.3975 swing area; 1.39847 (38.2% retracement); 1.3991 intraday high.
- Support: 1.39367 (50% midpoint of the Sep–Nov rise); then the 100- and 200-day moving averages converging near 1.3895.
- Bias: Below 1.3985/75 keeps bears in control; a close under 1.3937 opens 1.3895.
Key points
- USD/CAD sold off after a weaker Canada GDP report, then bounced off 1.3937 before fading.
- Price is back below 1.3968–1.3975 and the 38.2% retracement at 1.39847, maintaining a downside tilt.
- 1.3937 is the near-term pivot; a break targets the 100/200-day MA confluence around 1.3895.
- Failure to reclaim 1.3985–1.3990 risks a retest of the 1.39 handle amid thinner liquidity.
Trading takeaway
For now, the burden of proof sits with bulls. If sellers keep USD/CAD capped beneath 1.3968–1.3985, the path of least resistance remains lower toward 1.3937, with a decisive break eyeing 1.3895 where stronger dip-buying could emerge. A daily close back above 1.3985 would neutralize immediate downside risk and put 1.40 back in view.
FAQ
What triggered the latest USD/CAD move?
USD/CAD fell following a weaker-than-expected Canada GDP release. Despite the soft data, technical selling and positioning drove the pair lower, highlighting the dominance of chart levels in current FX trade.
What are the key technical levels to watch now?
Support sits at the 50% retracement near 1.39367. Resistance is clustered at 1.3968–1.3975 and the 38.2% retracement at 1.39847. A break below 1.3937 would target the 100/200-day moving average confluence near 1.3895.
Is the short-term bias bullish or bearish?
Bearish while USD/CAD trades below 1.3968–1.3985. A sustained move above that zone would reduce downside pressure and refocus attention on the 1.40 area.
How could upcoming data affect USD/CAD?
Further Canadian growth and inflation updates, along with U.S. labor and ISM prints, could swing rate expectations for the Bank of Canada and the Federal Reserve. Shifts in yields may add volatility, especially around the 1.3937 and 1.3895 supports.
Why is 1.3895 important?
It’s where the 100- and 200-day moving averages are converging. Such clusters often attract dip-buying or act as decision points for trend continuation. A clean break below would be a bearish signal.
Reporting by BPayNews.
