April 15 (Reuters) - Despite a fundamental backdrop of Canadian tariff, growth, and inflation uncertainty a failure above the quarterly Bollinger band suggests USD/CAD could go lower.

Since 2016 USD/CAD moves above the 20-quarter upper Bollinger have been short-lived. Breaches in the January quarters of 2016 and 2020 were followed by sizeable falls of 18%. Both pullbacks were from levels in the high 1.40s to the low 1.20s.

USD/CAD failed at 1.4792 in the first quarter of this year having broken above the upper Bollinger band at 1.4424. The big dollar subsequently closed the quarter out at 1.4386, forming a northern doji star on the candlestick chart (bearish). So far this month USD/CAD has lost 4.0% and is 6.5% below its April and 2025 peak.

A similar USD/CAD move to the 2016 and 2020 could see price fall into the 1.21s. A brave call considering the recent volatility surrounding trade, growth and inflation but the Bollinger band failure does warn of potential CAD gains.

Bollinger bands are used to assess price volatility around a central simple moving average with upper and lower lines usually drawn with a standard deviation of two. A widening of the bands indicates increasing volatility and a decrease in volatility as they narrow. The bands can give some insight into overbought and oversold conditions.
USD/CAD Quarterly Candle Chart:

(Peter Stoneham is a Reuters market analyst. The views expressed are his own)