USDCAD RETEST OR FRESH DOWNTREND? PRICE AT A CRUCIAL CROSSROAD!

USDCAD 22/05 – KEY RETEST OR FRESH DOWNTREND? PRICE AT A CRUCIAL CROSSROAD!
🌐 MACRO BACKDROP:
Canada’s CPI and Retail Sales have come in weaker than expected, signaling sluggish consumer demand and reducing the probability of near-term rate hikes by the Bank of Canada.

Meanwhile, the USD is stabilizing, supported by steady U.S. Treasury yields after the Fed reaffirmed its “higher for longer” stance.

Oil prices, a major driver of the Canadian Dollar, have shown no significant breakout, further weakening CAD’s bullish momentum.

🔍 TECHNICAL OVERVIEW (H1–H4 Chart):
After hitting a key swing low at 1.3820, USDCAD is now retracing towards the 0.5 Fibonacci zone (1.3889 – 1.3913), which also aligns with:

The 200 EMA resistance (red line)

Previous structure rejection zone

➡️ This area is critical – it could act as a trap zone before price resumes downward or breaks to confirm a short-term bullish reversal.

📈 TRADE SETUPS:
🔻 SELL SETUP (HIGH PROBABILITY IF PRICE FAILS AT RESISTANCE):
Entry: 1.3900 – 1.3913
Stop Loss: 1.3930
Take Profit Targets: 1.3884 → 1.3859 → 1.3847 → 1.3820

🔹 BUY SETUP (IF PRICE HOLDS ABOVE THE BASE ZONE):
Entry: 1.3820 – 1.3823
Stop Loss: 1.3805
Take Profit Targets: 1.3847 → 1.3880 → 1.3913

⚠️ STRATEGY NOTES:
Be cautious during the New York session, as potential comments from Fed officials or crude oil updates could spike volatility.

This is a textbook case of “reaction vs. continuation” at a Fibo cluster – stick to confirmed candlestick signals to avoid false breakouts.

📌 FINAL THOUGHTS:
USDCAD is in a corrective rally after an extended decline. The 1.3913 zone is a key decision point. Sellers should watch for signs of exhaustion, while buyers can target short-term retracements if support holds at 1.3820.