The USD/CAD pair exhibited volatility near 1.41 on Thursday, indicating the formation of another potential shooting star pattern. A short-term pullback toward 1.40 appears probable, although buyers may resurface at that level in the context of persistent U.S. dollar strength and trade-related fluctuations. The U.S. dollar exhibited volatility during the trading session on Thursday in relation to the Canadian dollar, with the 1.41 level remaining a focal point of interest. The formation of a shooting star during Wednesday’s session, which seems to be repeating on Thursday, indicates the possibility of a pullback toward the 1.40 level, a region that is likely to remain significant for USD/CAD traders.
The 1.40 level represents a substantial, round, psychologically significant figure, previously serving as resistance; thus, it is reasonable to anticipate a market dip towards this level. The 50-day EMA is positioned slightly lower, suggesting that there may be an eventual influx of buyers. Should USD/CAD surpass the peaks established on both Wednesday and Thursday, market participants may drive this pair toward the 1.4250 level. The zone has experienced significant selling previously and continues to represent a substantial supply area, indicating that strong resistance could reemerge around that point.
The current volatility in USD/CAD is a result of trade dynamics between the U.S. and Canada, further exacerbated by persistent uncertainty due to negotiation setbacks and speculation regarding Canada’s potential economic lag. Regardless of the eventual outcome, it is evident that Canada is significantly reliant on the United States, with approximately 75% to 80% of its exports directed southward, whereas the U.S. reciprocates with a comparatively modest volume of exports heading north. This asymmetric trade dependency continues to influence the pair’s movement and heightens its sensitivity to any cross-border policy changes or trade headlines.
Furthermore, a persistent global shortage of U.S. dollars remains evident, while the Federal Reserve has demonstrated no intention of implementing significant rate cuts, thereby contributing to a resurgence in dollar strength and shaping USD/CAD price action. The recent fluctuations in this pair over the past 36 hours may merely indicate a state of short-term exhaustion. A potential near-term pullback may entice value investors seeking to reenter the market, particularly if USD/CAD stabilizes near 1.40, a level that continues to serve as a critical technical and psychological support zone.