Canadian Prime Minister Mark Carney noted on Monday that he engaged in an extended and constructive dialogue with U.S. President Donald Trump, addressing topics such as trade. Since the start of the year, the two countries have been embroiled in an ongoing trade conflict. The USDCAD pair saw a slight uptick on Wednesday, with markets closely watching the Canadian employment data due out on Friday and signs of easing tensions between Canada and the U.S. Senior foreign exchange market analyst Nick Rees commented that Tuesday's bond market volatility helped stabilize the USDCAD within a higher range. Still, attention remains on Friday's data to determine whether this trend will persist. Nick believes the next round of labor market figures will be crucial for both the Federal Reserve and the Bank of Canada, and they could significantly impact the trajectory of the USDCAD. Canada is set to release its August jobs report on Friday, with expectations for 10,000 new jobs and an unemployment rate rising from 6.9% in July to 7%. Based on last Friday's data, Canada's economy contracted more than expected in the second quarter, leading investors to price in a 60% probability of a Bank of Canada rate cut at its September 17th policy meeting. The central bank has kept its benchmark interest rate steady at 2.75% since March.

Federal Reserve Governor Michelle Bowman filed a lawsuit against Trump to block his attempt to remove her. Trump accused Bowman of falsely reporting property information on a mortgage application, alleging fraud. Bowman argued that her property details were disclosed during her 2022 appointment review and that the president lacks the authority to dismiss a Fed governor. A hearing was held in the U.S. District Court for the District of Columbia, where the Trump administration claimed the removal falls under presidential power and is not subject to judicial review. Besides, Trump has repeatedly criticized Fed policies: after three rate cuts in 2024, the central bank has maintained rates to counter inflation risks stemming from trade policies. Markets expect a 25-basis-point rate cut from the Fed on September 16th–17th. The U.S. dollar faces pressure due to concerns over the potential reversal of Trump's tariff policies and threats to the Fed's independence.  

According to the daily chart, USDCAD is trading above the Bollinger Middle Band, with the MACD line and the signal line returning near the zero axis. The RSI stands at 53, in neutral territory, while the Bollinger Bands are narrowing, and moving averages are flattening. These indicate a wait-and-see mode of the market with potential for a breakout at any time. Overall, the uptrend is not over, and there is a high likelihood of further upside toward the EMA200 or previous highs around 1.386 and 1.392, respectively. In the 4H chart, the pair found strong support at the Bollinger Lower Band before rebounding sharply to the Bollinger Upper Band. At present, the Bollinger Bands are tightening upward, and moving averages are diverging higher, signaling short-term bullish momentum. In addition, the RSI is at 60 with lows gradually rising, indicating strong bullish sentiment. MACD lines are running above the zero axis and have formed an "angel's kiss" pattern, suggesting potential further upside. Immediate resistance is seen near the previous high at 1.385. Therefore, buying at lows is recommended. 

Trading direction: Buy

Entry price: 1.381

Target price: 1.393

Stop loss: 1.37

Support: 1.378/1.37/1.357

Resistance: 1.393/1.4/1.401