The Canadian economy is in a precarious position.The Toronto housing market is slumping badly and that's going to be some serious downward pressure in the pipeline as the sales of pre-build homes and condos dry up. In addition, there is deep uncertainty about US-Canada trade. For now, the vast majority trade is still flowing at 0% tariffs with steel, aluminum and forestry as big exemptions. Where it gets scary is next summer when the renegotiation of the USMCA agreement begin. Trump may insist on 15% baseline tariffs on Canada and Mexico and that could kick off a fresh round of panic and pain. For now, the uncertainty is biting. Retail sales have held strong but a series of jobs reports have been weak and business investment is drying up.There is upside here as well though. The court rulings invalidating tariffs -- if upheld -- are a big potential positive for both Canada and global growth. I'd expect CAD to be one of the biggest winners if those are struck down, though surely Trump would try to find other ways to add tariffs so that could complicate the situation. There is also the potential for some kind of negotiated deal, though some of the comments from the Carney administration make me think it won't be anything near as clean as what Canada has now.In terms of the chart, it's been a quiet range from 1.37-1.39 since August. The step up came after a poor Canadian employment report and it's stayed there, though it could be starting to trace out a minor head-and-shoulders pattern. Zooming out, the downtrend still looks intact but a rise above 1.3940 (and 1.4000) would open the way for a return to the mid-1.40s. I'd imagine that kind of break would come alongside some soft Canadian economic data and a dovish BOC.The next central bank meeting is Sept 17 -- the same as the FOMC -- and right now there is a 90% chance of a cut priced in but only 53 bps priced in for the year ahead. I tend to think the BOC is going to have to cut further and that inflation will stay in check .That could mean an additional 50-100 bps needs to be priced in, which should put downside pressure on the loonie (and upside in USD/CAD).So the big picture view is to wait on a break of the 1.37-1.39 range and see what the BOC has to say. This article was written by Adam Button at investinglive.com.