• USD/CAD demonstrates strength near 1.3800 amid weakness in the Canadian Dollar.
• Canadian Retail Sales declined unexpectedly by 0.2% in October.
• Investors await the preliminary US Q3 GDP data.

The USD/CAD pair trades firmly near Friday’s high around 1.3800 during the early European trading session on Monday. The Loonie pair demonstrates strength as the Canadian Dollar (CAD) underperforms amid growing household spending concerns.

On Friday, Statistics Canada reported that Retail Sales, a key measure of consumer spending, declined 0.2% on a month in October, while they were expected to remain flat. In September, the consumer spending measure also declined by 0.9%.

Falling household demand could underpin the need for more interest rate cuts by the Bank of Canada (BoC) in the near term.

Meanwhile, the US Dollar (USD) trades slightly lower ahead of the flash United States (US) Q3 Gross Domestic Product (GDP) data, which will be released on Tuesday. The US economy is expected to have grown at a moderate pace of 3.2%.

USD/CAD technical analysis

USD/CAD clings to gains near 1.3800 on Monday. The pair holds beneath a descending 20-day Exponential Moving Average (EMA), keeping the short-term bias tilted lower as bounces remain contained by the average. The EMA’s steady downturn underscores persistent supply on upticks. The 14-day Relative Strength Index (RSI) sits at 36, near oversold after a modest bounce from last week’s extremes, while momentum remains fragile.

A sustained recovery would require a daily close above the 20-day EMA to ease downside pressure that could increase the odds of an upside move towards the round-level figure of 1.3900. Until then, the downbeat setup persists and could strengthen if the spot breaks below the August 7 low of 1.3720.

(The technical analysis of this story was written with the help of an AI tool.)