USD/CAD Tests Support, but the Loonie Still LeadsUSD/CADOANDA:USDCADEvelyn_ReedUSD/CAD has fallen into the 1.376–1.379 support area after a steady decline from the July highs. Technically, this is an obvious place for a reaction. Fundamentally, however, the case for a sustained dollar recovery is less convincing. The Canadian dollar reached its strongest level in almost three months on August 20 as oil prices rose and optimism improved around a potential U.S.–Canada trade agreement. USD/CAD traded near 1.3790 and briefly touched 1.3757. The domestic data has also become more supportive for CAD. Canada added 75,100 jobs in July, far above expectations, while unemployment fell to 6.4%. July inflation then accelerated to 3.0%, slightly above expectations, although core measures remained close to 2%. That combination gives the Bank of Canada little urgency to ease policy. The overlooked detail is that the U.S. side of the pair has moved in the opposite direction. Recent U.S. labour and inflation data reduced expectations for another immediate Fed hike, weakening one of the key arguments that previously supported the dollar. That creates the contradiction. USD/CAD is sitting on technical support at the same time that the macro backdrop still favours the Canadian dollar. What the chart shows The four-hour structure remains bearish beneath descending resistance. The 1.390–1.393 area previously acted as support and now becomes the first meaningful resistance zone above current price. The lower 1.376–1.379 area is the immediate support test. A bounce from here would be normal technically, but it would not change the broader structure by itself. Primary interpretation The cautious USD/CAD view remains stronger while price stays below the descending trendline and the 1.390–1.393 resistance zone. A rebound into that area followed by rejection would keep the sequence of lower highs intact. Alternative interpretation The alternative is that the support zone produces a more durable reversal. That scenario gains weight if USD/CAD reclaims 1.393 and begins establishing higher lows above the broken resistance area. For that to become more convincing, the macro backdrop would probably need to change as well — weaker oil, softer Canadian data, or a renewed rise in U.S. rate expectations. What would change the current view The bearish interpretation weakens after sustained four-hour acceptance above 1.393 and the descending resistance line. The support-based recovery thesis weakens if price begins accepting levels below 1.376. What comes next The next important signals are oil prices, developments in U.S.–Canada trade talks and whether the Fed/BoC rate expectations continue moving in opposite directions. USD/CAD has reached a level where a bounce makes technical sense, but the macro story still belongs to the loonie.