Elliott Wave Update of USDCAD – February 18th, 2026

Key Takeaways

• USDCAD gains on Canada inflation dip
• BoC likely to cut rates further
• Elliott Wave signals bullish continuation
• Watch key resistance near 1.3800
• Traders should monitor CPI data releases

Pulse Analysis

The Canadian dollar has been under pressure as the latest domestic inflation reading came in below expectations, reviving expectations that the Bank of Canada will resume its easing cycle. With consumer price growth easing to 2.1% year‑over‑year, the central bank is poised to deliver another rate cut before the end of the quarter. This dovish stance narrows the interest‑rate differential with the United States, making the U.S. dollar more attractive and pushing the USDCAD pair higher. Investors also watch the USD index, which has been gaining momentum on expectations of a delayed Fed rate hike.

Elliott Wave practitioners see the current rally as a continuation of a five‑wave upward thrust that began in late 2024. Wave III is currently in progress, with price action respecting the 1.3500‑1.3600 corrective zone before breaching the 1.3800 resistance that marks the projected wave‑IV termination point. A break above 1.3800 would confirm the transition into wave V, setting the stage for a potential move toward the 1.4200 target. Conversely, a pullback below 1.3400 could signal a corrective re‑evaluation. Technical indicators such as the RSI are trending upward, supporting the wave count's bullish narrative.

Traders should incorporate the identified key level into risk‑management frameworks, placing stop‑loss orders just below 1.3800 to protect against a sudden reversal. The upcoming Canadian CPI release and the U.S. non‑farm payrolls report will provide fresh data points that could either reinforce the bullish bias or trigger a corrective wave. Given the tight correlation between monetary‑policy expectations and currency flows, positioning ahead of these events can enhance return potential while limiting exposure to volatility spikes. Diversifying with correlated assets like oil can further hedge against unexpected Canadian policy shifts.