USDCAD - Wave (4) Absorbing at 1.415-1.417 Before Wave (5) Targets 1.4447-1.4540, but Macklem Is No Longer Purely Dovish
USDCAD - Wave (4) Absorbing at 1.415-1.417 Before Wave (5) Targets 1.4447-1.4540, but Macklem Is No Longer Purely Dovish
Reference data | as of 02/07/2026, 20:40 GMT+7
| Field | Value | Source |
|---|---|---|
| USDCAD | 1.4165 | TradingView live (-0.36%) |
| DXY | 100.8 | sidebar live (-0.71%) |
| USOIL | 67.6 | sidebar live (-0.40) |
| BRENT | 71.4 | sidebar live |
| US 10Y Yield | 4.47% | sidebar live |
| US 2Y Yield | 4.11% | sidebar live |
| US Real Yield (corrected) | +0.27% | US10Y minus CPI 4.2% |
| US CPI YoY (actual) | 4.2% | BLS May 2026 |
| Fed policy rate | 4.25-4.50% | Hold, Warsh: inflation expectations "have come down" |
| BoC policy rate | Hold | Macklem: mixed signals today |
| VIX | 16.0 | sidebar live (-3.2%) |
| XAUUSD | 4,12x | +96.48 (+2.39%) |
| JP 10Y Yield | 2.77% | sidebar live |
| DE 10Y Yield | 2.96% | sidebar live |
Data quality warning. Pipeline US CPI 2.4% stale; actual 4.2% (BLS May 2026). Pipeline US2Y 3.653% wrong; actual 4.11% (sidebar live). Pipeline real yield 2.089% wrong; actual +0.27%. Pipeline JP10Y 1.47% stale; actual 2.77%. Pipeline DE10Y 2.99% wrong; actual 2.96%. Pipeline EIA "awaiting release" stale.
L0 - Regime Identification
USDCAD trades at 1.4165 in the evening session of 2 July, down -0.36%. Having completed wave (3) at the ~1.42 peak last week -- driven by the "double squeeze" of a 13-month DXY high combined with oil below 70 -- USDCAD is now in wave (4) correction, with price testing exactly the green support zone at 1.415-1.417 on the D1 chart.
This is not a reversal. DXY has pulled back to 100.8 (from its own wave (3) peak) and USOIL continues declining (67.6) -- both primary USDCAD drivers are in their own correction phases before resuming trend. The wave (5) target of 1.4447-1.4540 (Fib 0.618 extension) remains intact on the chart.
However, BoC Governor Macklem's remarks today at Sintra carried a mixed tone -- no longer purely dovish as last week. This is a variable worth monitoring closely.
Regime: Medium-High Bull medium term, wave (4) absorption near term. Awaiting confirmation of the 1.415-1.417 zone holding.
L1 - Driver Stack
The first bullish driver is continued oil weakness (67.6, having broken multiple support zones per yesterday's USOIL analysis) -- CAD is a petro-currency, weak oil weakens CAD, pushing USDCAD higher. The second is the positive US real yield of +0.27% (US10Y 4.47% minus actual CPI 4.2%), broadly USD-supportive. The third is the technical structure: wave (5) awaiting activation once wave (4) completes at the current support zone.
Headwinds: DXY has pulled back from its own wave (3) peak to 100.8 (-0.71%) -- part of the "double squeeze" has eased. VIX fell -3.2% to 16.0 -- clear risk-on, typically supportive of commodity currencies like CAD. XAUUSD +2.39% -- strong gold bounce, often accompanying improving risk sentiment, potentially providing mild broad commodity support to CAD. Most importantly: Macklem's remarks today were no longer purely dovish -- "comfortable where we are on policy" and rejecting the term "stagflation" suggest the BoC is not rushing further easing, though it still acknowledges "trade tariffs a headwind" and "inflation above target a dilemma."
L2 - Macro Snapshot
Canada side: BoC Governor Macklem spoke at Sintra today with a mixed tone. Key points: rejected the term "stagflation" as applicable to Canada currently, stated "comfortable where we are on policy" -- more neutral-to-hawkish language than expected. Simultaneously acknowledged "trade tariffs a headwind" and "inflation above target a dilemma" -- showing the BoC still faces two-way pressure. On AI productivity, Macklem called it an "open question" for near-term inflation. Net: the BoC is no longer signalling clear dovishness as before, partially reducing the USDCAD-bullish force from CAD policy weakness.
US side: Fed Chair Warsh also spoke at Sintra, with a somewhat less hawkish tone: "labor market is steady," inflation expectations "most recently have come down." A subtle shift from Hammack's "may need higher rates" tone last week -- suggesting internal Fed views may be diverging. US2Y actual 4.11% (pipeline 3.653% wrong), US10Y 4.47%. Corrected real yield: +0.27%.
Oil: USOIL 67.6, continuing to decline per yesterday's thesis of "5 consecutive draws ignored, supply narrative winning." This remains the strongest and most durable driver for USDCAD bullish positioning -- CAD is directly tied to export oil prices.
DXY 100.8 (-0.71%): pullback from its own wave (3) peak near 104.2 (per this week's DXY analysis, currently in its own wave (4) correction). When DXY completes wave (4) and initiates wave (5) toward 103-104.5, this becomes an additional tailwind for USDCAD.
L3 - HTF Structure (D1 Chart)
From the larger wave (4) low near 1.32 (before the "Iran war begins -- Feb 28, 2026" event), USDCAD constructed an upward impulse sequence:
Wave (c)/(a): formed a low near 1.35-1.36 in early 2026. Wave (1): advanced to ~1.40. Wave (2): corrected to ~1.35 (testing the "Iran war begins" low zone). Wave (3): a strong impulse from 1.35 to the ~1.42 peak -- driven by the double squeeze of a high DXY combined with low oil. Wave (4): currently in progress, price testing the green support zone at 1.415-1.417.
Key levels:
- Wave (3) peak: ~1.42 (confirmed)
- Wave (4) support zone: 1.415-1.417 (green zone on chart, currently being tested)
- Current price: 1.4165 -- within the support zone
- Deeper support on breakdown: 1.410, 1.400 (former wave (1) peak)
- Wave (5) targets: 1.4447 (near target) then 1.4540 (Fib 0.618 extension, far target)
- Wave (4) invalidation: below the wave (1) peak at 1.400
RSI D1: in elevated territory but showing signs of cooling from overbought during the wave (3) advance -- a healthy reset before wave (5), not a reversal signal.
Key observation: the 1.415-1.417 zone is the pivotal level. If it holds with confirming price action (hammer, bullish engulfing), wave (5) could activate early. A break below 1.415 on volume requires reassessing the depth of wave (4).
L4 - Intermarket Cross-Check
USOIL 67.6 (-0.40): the strongest driver for USDCAD bullish positioning. Per yesterday's USOIL analysis, oil is in a falling channel targeting 63.57 then 57.60 -- if this continues, it is a persistent tailwind for USDCAD toward wave (5).
DXY 100.8 (-0.71%): currently in its own wave (4) correction (per this week's DXY analysis). The DXY-USDCAD correlation is diverging slightly -- USDCAD is declining less proportionally than DXY, confirming oil weakness is acting as an independently stronger driver than broad USD strength.
VIX 16.0 (-3.2%), SPX/NAS100 higher: clear risk-on. Normally risk-on supports commodity currencies (CAD strengthens, USDCAD falls). This is a mild headwind to the USDCAD bullish thesis, but is being overridden by oil weakness.
XAUUSD +2.39%: strong gold bounce within its own wave (4) (per this week's XAUUSD analysis). No significant direct impact on USDCAD.
AUDCAD 0.9826: commodity currency cross-check. AUD is also testing its correlation with CAD, both influenced by risk sentiment and broad commodity pricing.
L5 - Event Risk
This week:
3 July -- Official NFP (USD): the week's dominant catalyst for broad USD. Strong NFP = broad USD strength, additional support for USDCAD. Weak NFP = temporarily reduces USD pressure, but oil weakness may still keep USDCAD elevated.
Next BoC communication: monitor whether Macklem maintains this mixed-to-hawkish tone or reverts to clear dovishness. If the BoC turns more hawkish (particularly on inflation concern), it could create headwind for the USDCAD bullish thesis.
Next EIA (8 July): a sixth consecutive draw per the USOIL thesis? Continued oil weakness would strengthen the USDCAD tailwind further.
Do not commit full position size here -- await confirmation that wave (4) holds at 1.415-1.417.
| Scenario | Target | Probability |
|---|---|---|
| Wave (4) holds 1.415-1.417, wave (5) initiates toward 1.4447 | 1.4447-1.4540 | 55% |
| Sideways 1.410-1.420 awaiting NFP confirmation | 1.410-1.420 | 25% |
| BoC more hawkish + continued risk-on, breaks below 1.410 | 1.400-1.410 | 15% |
| Unexpected sharp oil bounce, USDCAD falls deeper toward 1.400 | < 1.400 | 5% |
L6 - Conviction Scorecard
| Factor | Bull USDCAD | Bear USDCAD | Weight |
|---|---|---|---|
| USOIL continuing to decline (67.6, falling channel intact) | Bullish | -- | High |
| US real yield +0.27% (positive, USD-supportive) | Bullish | -- | High |
| D1 structure: wave (4) at support zone, wave (5) targets 1.4447-1.4540 | Bullish | -- | High |
| DXY in its own wave (4), may activate wave (5) | Bullish | -- | Medium |
| Macklem mixed-to-hawkish today (no longer purely dovish) | -- | Reduces CAD-weakness driver | Medium |
| VIX -3.2%, clear risk-on | -- | Bearish USDCAD (commodity FX support) | Medium |
| RSI cooling from overbought, not a reversal | Bullish (healthy reset) | -- | Low |
Conviction: Medium-High Bull. Oil weakness remains the strongest and most durable driver. The technical structure shows wave (4) testing precisely the anticipated support zone. However, two new factors warrant monitoring: Macklem's reduced dovishness may slow the advance, and clear risk-on (VIX -3.2%) creates a mild headwind. Not absolute conviction -- confirmation of 1.415-1.417 holding is needed before full sizing.
L7 - Time Horizon
24-48h: NFP 3 July is the nearest variable. USDCAD ranging 1.412-1.420. Monitor the reaction at the 1.415-1.417 support zone to confirm wave (4) holds.
1-2 weeks: If support holds and NFP does not create a major shock, wave (5) likely initiates toward 1.4447 first, then 1.4540. EIA 8 July continues as an indirect catalyst via the oil channel. Monitoring range: 1.400-1.4540.
1-3 months: If oil continues declining toward the 57.60 target per the USOIL thesis, USDCAD has room to test above 1.4540, potentially toward the larger 1.454-1.460 psychological resistance zone. Reversal risk: an unexpected Iran deal signing driving a sharp oil bounce, or the BoC turning clearly hawkish, could send USDCAD back to test 1.400.
L8 - Invalidation Conditions
The wave (5) thesis fails if USDCAD posts a daily close below 1.400 (the former wave (1) peak) -- violating the Elliott rule that wave (4) cannot breach the wave (1) peak.
Early warning if price breaks below 1.410 on volume -- wave (4) may be deeper than expected, requiring further confirmation before going long.
Bullish continuation confirmed if USDCAD holds above 1.415 through NFP on 3 July and begins breaking above 1.420 -- wave (5) has activated.
The most important signal this week: price reaction at 1.415-1.417 combined with NFP on 3 July. Also monitor further BoC communication to confirm whether Macklem maintains this mixed-to-hawkish tone.
Disclaimer: This analysis is for informational and educational purposes only and does not constitute financial advice. Readers are solely responsible for their own trading decisions.
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Intermarket Edge | Published 02/07/2026