By Justin McQueen

June 19 (Reuters) - CAD remains on the back foot, with USD/CAD pushing to levels last seen in April 2025. A hawkish Federal Reserve has dominated the narrative, but trade risks are evident leading into the July USMCA review, and with U.S. President Donald Trump again signalling the possibility of non-renewal, the tone around negotiations remains unconstructive. In keeping with the familiar "escalate to de-escalate" playbook, headline risk is likely to stay elevated near-term, leaving the bias skewed to further topside in spot.

That said, position and technicals are beginning to flash caution. The daily RSI has pushed north of 83 - its most extreme reading since the March 2020 COVID-19 episode - which underlines just how stretched the current move is. Historically, such signals have tended to precede a period of consolidation or modest pullback over the subsequent 20–30 days. As such, while the macro backdrop remains CAD-negative, chasing USD/CAD at current levels looks increasingly unattractive from a risk-reward perspective.

Of course, a tail-risk outcome where the U.S. exits USMCA would materially shift the landscape. In that scenario, CAD would likely reprice sharply weaker, with USD/CAD extending towards the 1.44–1.45 region, echoing the impulsive move seen during the peak of trade tensions in early 2025.
USDCAD returns RSI


Justin McQueen is a Reuters market analyst. (The views expressed are his own). Editing by Nia William ((Email: ))