USD/CAD Forecast: Surges to New Highs as Fed Holds - Key Scenarios Ahead of NFP

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ACY Securities - Jasper Osita

Jul 31, 2025

USD/CAD perfectly reacted to the H4 retracement zone forecasted in our webinar, confirming the power of patience and planning.
The pair is now testing a critical H4 Fair Value Gap (1.3819–1.3822) that will dictate the next leg.
Tomorrow’s NFP could be the catalyst that confirms whether bulls extend higher or a deeper retracement unfolds.

Narrative: A Forecast Turned Reality

Sometimes the market rewards patience and planning. That’s exactly what happened with USD/CAD this week. In our recent webinar (watch here at 51:32):

We outlined a roadmap: wait for the market to dip into a key retracement zone anchored on the 4-hour chart, then look for confirmation on the 15-minute timeframe before engaging.

That’s exactly how it played out. Price cleanly dipped into the 0.236 retracement zone (green discount area) we highlighted, paused to build liquidity, then launched higher, breaking through the range highs. Traders who stayed disciplined and trusted the structure saw the setup materialize almost to the pip.

Before & After: Setup Materialized

Before – Forecast from the Webinar

This was the original forecast where we highlighted the 0.236 retracement zone (green) on the H4 chart as the area to watch for bullish continuation.

After – The Follow-Through Rally

Price dipped into the zone, consolidated, then broke out as expected, now trading above the range highs.

What’s Been Driving the Market

Several elements have been influencing USD/CAD beyond the charts:

Federal Reserve Policy Pause – The Fed’s decision to pause rate hikes has left the USD stronger as markets now expect higher-for-longer policy, giving the dollar a solid foundation.
Bank of Canada’s Stance – With the BoC taking a more cautious tone amid slowing domestic growth, CAD remains less attractive from a yield perspective.
Trade and Tariff Tensions – Investors remain wary ahead of the August 1 tariff deadline, weighing potential US tariffs on Canadian exports, a factor that could further pressure the loonie.
Oil Prices as a CAD Proxy – Rising oil prices have offered some support to CAD, but so far not enough to offset USD momentum.

These drivers have been the underlying fuel behind the breakout we anticipated, and they remain critical as the market positions itself ahead of tomorrow’s Non-Farm Payrolls (NFP).

Technical Outlook

USD/CAD is currently hovering near the 1.3819–1.3822 zone, which aligns with a H4 Fair Value Gap (FVG) acting as short-term resistance. Price recently rallied into this level after confirming a bullish continuation from the previous discount zone we mapped out.

Two key H4 FVGs are now framing the market:

The upper FVG (1.3819–1.3822) is the immediate decision point.
The lower FVG (1.3777–1.3799) represents a strong area of potential demand and liquidity if price retraces deeper.

This structure sets the stage for two possible paths: a continuation of the bullish move, or a deeper retracement before attempting higher levels.

Bullish Scenario

The market maintains its bullish momentum by holding above the 1.3819–1.3822 zone. Buyers continue to absorb selling pressure, setting up another leg higher.

A clean H4 close above 1.3822 would confirm buyers remain in control.

Targets:

Immediate target: 1.3861 (first resistance)
Extended target: 1.3889, which also coincides with a key liquidity pool above recent highs

Bearish Scenario

The market fails to hold the 1.3819–1.3822 zone, suggesting buyers are losing momentum. Price could then retrace deeper to collect liquidity before deciding the next direction.

A clean rejection and close back below 1.3819, followed by sustained bearish momentum on the lower timeframes (M15–H1).

Targets:

Short-term target: 1.3799 (top of the lower FVG)
Extended target: 1.3777 (full fill of the lower FVG)

Final Takeaway

USD/CAD has delivered exactly what we mapped out in the webinar—reacting cleanly to the H4 discount zone and now consolidating at a critical decision point. Tomorrow’s Non-Farm Payrolls (NFP) release will be the next major catalyst that could fuel the next big move.

If NFP data reinforces USD strength, a breakout toward 1.3861–1.3889 becomes highly likely. However, a weaker-than-expected report could flip sentiment quickly, triggering a rejection back into the lower H4 Fair Value Gap (1.3777–1.3799).

Stay disciplined, wait for confirmation on the lower timeframes, and be prepared for a spike in volatility during the release.

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This content may have been written by a third party. ACY makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplies by any third-party. This content is information only, and does not constitute financial, investment or other advice on which you can rely.

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USD/CAD Forecast: Surges to New Highs as Fed Holds - Key Scenarios Ahead of NFP

Narrative: A Forecast Turned Reality

Before & After: Setup Materialized

Before – Forecast from the Webinar

After – The Follow-Through Rally

What’s Been Driving the Market

Technical Outlook

Bullish Scenario

Bearish Scenario

Final Takeaway

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