The USDCAD has recently risen but faced resistance near its 100-day moving average. This resistance led to selling pressure, causing the pair to drop by the end of the trading day. The downward trend continued, bringing the price back into a previous trading range from early June to late July. The upper limit of this range aligns with the 38.2% retracement level of the rally that began on July 23, at 1.3762. This level acts as a short-term market direction indicator. A rise above 1.3762 may indicate renewed buying interest, whereas remaining below this level could push the price towards the July 23 low of 1.37268.

Selling Trend

The selling trend is still in place, raising questions about its endurance. Sellers are taking control of the USDCAD, driving it back into the familiar trading area we saw from June to late July 2025. With the price now under the important pivot level of 1.3762, it seems the easiest path is downward for the moment. This perspective is reinforced by the failure to maintain above the 100-day moving average earlier this week. This price movement aligns well with recent economic data. Canada’s latest jobs report for July 2025 showed a surprising gain of 45,000 jobs. Meanwhile, last week’s US Core CPI dropped to 2.8%, slightly below expectations. This difference gives the Bank of Canada more reason to keep interest rates steady compared to the US Federal Reserve.

Oil Prices and Trading Strategy

There is renewed strength in WTI crude oil, which has returned to the $85 per barrel mark due to updated OPEC+ guidance. Historically, a rise in oil prices usually supports the Canadian dollar and increases pressure on the USDCAD exchange rate. This adds an extra advantage for those selling the pair. In the coming weeks, buying put options that expire in late August or September 2025 could be a simple strategy. Traders might consider strikes around the 1.3750 level to aim for a move toward the July 23 low of 1.37268. This strategy provides defined risk in case buyers unexpectedly take control again. Since the pair is back in a “comfort zone,” a bear put spread might be a wiser approach for some traders. This involves buying a put at a higher strike, such as 1.3750, and selling another at a lower strike, like 1.3700. This strategy reduces initial costs and allows for profit if the price drifts lower within this set range, rather than breaking down sharply. It’s crucial to remember the long periods of consolidation the pair experienced in 2023, where it often oscillated between significant support and resistance levels for months. Thus, taking profits near established support levels like 1.37268 and 1.3700 makes sense. This strategy safeguards gains in case the pair bounces off the bottom of the range as it has done before. Create your live VT Markets account and start trading now.

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