USDCAD approaches Weekly Lows: Where Could the Loonie Go from Here?

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USDCAD had seen a decent rebound from last week lows, starting the week at 1.36850.

It was a generally positive week for the US Dollar and a relatively muted one for the Loonie. A lack of key economic data before this morning led to some recovery in the USD, particularly as earnings came in overall better than expected.

We just received the report for the Core PCE Data which came in as expected, at 2.5% Y/Y.
This piece of data is what the FED wants to see to resume the cut cycle that had began in September 2024, taking the Effective FED Funds Rate (The main US Policy rate) from 5.50% to the current 4.25%.

The last 25 bps cut was done in December 2024.

The Bank of Canada on the other hand was cutting rates aggressively from June 2024 to March 2025 and paused at last meeting - Taking the Policy Rate from 5% to the current 2.75%.

The Central Banks and the market are now waiting for further influence from the Trump tariffs to implement more changes to their stance, as USDCAD had gone from 1.3450 to 1.4750 between October 2024 to February 2025.

Observe the key levels for the pair through a multi-timeframe technical analysis.

USDCAD Technical Analysis - From the Daily to the Hourly Timeframes

USDCAD Daily Chart

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USDCAD Daily Chart, May 30, 2025. Source: TradingView

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USDCAD has been a volatile pair, to say the least, as we’ve seen many themes adding to the depreciation of the Canadian Dollar: the aggressive rate cuts from the BoC, tariffs on key sectors, including Steel and Aluminum production - one of the key producing sectors for Canada - and unforeseen trade tensions between the two neighboring nations.

USDCAD is now moving toward levels last seen in October 2024 and towards what has before been a more typical range for the pair, between 1.30 and 1.40.

Prices are moving towards the main daily support between 1.3686 to 1.3730. The next daily support is 1.3550 - 1.3600.

If prices were to rebound from here, look toward the Main Daily Resistance zone: 1.3750 to 1.38. A break of that would hint toward the next Daily Resistance at 1.41 - 1.4150.

USDCAD 4H Chart

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USDCAD 4H Chart, May 30, 2025. Source: TradingView

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Prices have just gone through the preceding S1 zone that was located between 1.3780 to 1.3800, having rejected the highs after yesterday's US Federal Court announcement to terminate Trump's plan to impose tariffs - what has been named the Trump Taco.

Since USD weakness has been observed throughout different markets, the USDCAD has also been influenced by that theme.
Trump has also spoken more about the Canada Annexation theme with his plans for a Golden Dome, though those are just some of the several foolhardy quotes from the US President.

Prices are now approaching S2 levels between 1.3740 and 1.3760.

USDCAD 1H Chart

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USDCAD 1H Chart, May 30, 2025. Source: TradingView

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The 1h Chart takes a deeper look at where prices could stall.
The MA 50 on the hourly timeframe is actually adding more pressure in the rejection, pointing more towards S3 levels between 1.37 and 1.3720.

If prices break further, look towards prices stalling in the heart of the Daily Support Level as we can observe a technical confluence with the high of the descending channel.

Any rebound from here hints at the Main Pivot situated at 1.38150.

Safe Trades!

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