The USDCAD started the session on a firm footing, extending its recent gains and moving above a well-defined swing area between 1.38127 and 1.38315. That zone has acted as a pivot for buyers and sellers in recent days, and the break higher initially encouraged momentum traders to lean toward further upside. The rally carried the pair to a peak at 1.3844, its highest level of the session.
However, the move lacked follow-through. Momentum quickly faded, and profit-taking, along with fresh selling interest, pushed the price back down. The inability to sustain the break is a reminder of the pair’s broader trading conditions: buyers are still probing higher, but conviction remains limited.
On the downside, the retracement has dragged the pair back into the very same swing area that had been breached earlier in the day. Attention now shifts to the cluster of the 100- and 200-bar moving averages on the 4-hour chart, both converging near 1.3804. That confluence provides an important technical barometer. Holding above would keep the bullish case alive in the short term, while a move below would tilt the bias back in favor of sellers.
From a broader perspective, USDCAD has struggled to establish a sustained trend. Since the second half of July, the pair has been confined to a 1.3720–1.3923 range, creating a market defined more by swings than directional conviction. At August highs, the price not only ran into resistance at the upper swing area but also tested the 38.2% retracement of the decline from the March high, which comes in at 1.3923. That level capped the upside, attracting willing sellers and reinforcing the notion that rallies remain opportunities for fade trades until proven otherwise.
That was then, this is now. For now, traders will be watching whether the 1.3804 zone holds. A bounce from that level could set the stage for another test higher within the range, while a decisive break below would open the door for a move back toward the lower boundary of the range near 1.3720.
