USD/CAD Price Forecast: Falls to near 1.3850 after breaking below nine-day EMA

• USD/CAD may fall toward the descending channel bottom at 1.3640.
• The 14-day Relative Strength Index hovers at 40.7, indicating persistent selling pressure.
• The immediate barrier is the nine-day EMA at 1.3856.

USD/CAD extends its losses for the second consecutive day. trading around 1.3820 during the Asian hours on Thursday. The technical analysis of the daily chart indicates the pair is positioned within the descending channel pattern, signalling a bearish bias.

The USD/CAD is keeping a bearish near-term bias as spot holds below both the nine- and 50-period Exponential Moving Averages (EMAs). The short-term EMA sits just above price, reinforcing immediate topside pressure, while the longer EMA defines a broader cap on recovery attempts. The 14-day Relative Strength Index (RSI) at 40.7 stays in mildly negative territory, hinting that selling pressure persists but without reaching oversold extremes.

The USD/CAD pair may navigate the region around the descending channel bottom at 1.3640. A break below the channel would open the doors for the pair to navigate the region around 1.3481, the lowest since October 2024.

On the upside, the immediate barrier lies at the nine-day EMA of 1.3856, followed by the descending channel top near the 50-day EMA of 1.3941. A break above this confluence resistance zone would strengthen the bullish bias and support the pair to explore the region around the nearly 17-month high of 1.4248, which was recorded on June 24, 2026.

Williams flags strong economy behind higher yields, keeps Fed focus on 2% inflation

Fed's Williams delivers a slightly more hawkish-than-usual tone, with a 6/10 FXS Speechtracker score marginally above the 5.9/10 historical average, as rising yields are framed as a function of a strong economy and robust outlook rather than worsening inflation expectations. The emphasis that tariffs and Middle East conflict are pushing inflation above target, alongside a solid labor market and strong investment demand, is balanced by reassurance that inflation expectations are contained and the trend is toward lower inflation, keeping the policy narrative anchored around achieving 2% inflation in the foreseeable future. Overall, the message supports the view that the Fed can stay data-dependent while tolerating tighter financial conditions driven by growth rather than inflation fears.

The FXS Fed Sentiment Index slipped by 1.42 points to 127.44, indicating a modest pullback in perceived hawkishness despite the speech remaining firmly in hawkish territory above the 100 neutral line. This configuration suggests that, relative to the established baseline, markets still see the Fed as leaning toward tighter policy, but Williams' acknowledgment of easing inflation trends tempers expectations for additional aggressive action even as the Dollar stays supported by strong-growth-driven yield dynamics.

(The technical analysis of this story was written with the help of an AI tool. Know more.)