USD/CAD is around 1.3950, staying near the bottom of its rising channel. It has been stable for the second straight day during European trading hours. The daily chart shows that the bullish trend might be losing strength as the pair tries to dip below its upward pattern. The 14-day Relative Strength Index (RSI) is above 50, signaling that upward momentum is still in play. USD/CAD is also trading above the nine-day Exponential Moving Average (EMA), indicating positive short-term price action.

Six Month High

If the pair bounces back within the channel, it may reach the six-month high of 1.4016, last seen on May 13. If it breaks this peak, the next target would be the upper boundary around 1.4110. Support for USD/CAD starts at the nine-day EMA of 1.3925. If the price falls below this level, short-term momentum could weaken, potentially leading to a drop to the 50-day EMA at 1.3828. The Canadian Dollar had mixed results, improving mostly against the Euro. Here’s how the exchange rates changed: USD rose 0.59% against EUR, while CAD stayed steady against USD. Meanwhile, CAD gained 0.62% against the Euro and had a slight increase of 0.10% against GBP.

Critical Point

The USD/CAD pair is trading close to 1.3950, which is a key level testing the lower edge of its recent upward channel. The weakening bullish trend hints at potential changes in the coming weeks, offering chances for traders to act in either direction. Since the RSI remains above 50, a rebound is likely, potentially bringing the pair back to the 1.4016 high from May 2025. Those anticipating this could consider purchasing call options with a strike price near 1.4000. This provides a clear risk limit if the pair fails to climb and falls instead. However, the risk of a downturn is growing, especially after the recent U.S. Non-Farm Payrolls report showed job growth slowing to 155,000, which was below expectations. A drop below 1.3925 could lead to a deeper decline towards the 1.3828 support zone. In this case, buying put options might defend against further dips or serve as speculation on more decline. Uncertainty about the Federal Reserve’s next actions may increase market volatility. Similar uncertainty in late 2024 caused significant price fluctuations in this currency pair. Traders might deploy strategies like straddles or strangles to prepare for major price movements, no matter the direction. We should also monitor oil prices and Canadian inflation for insights. With West Texas Intermediate crude staying above $85 per barrel and Canada’s latest inflation rate remaining high at 2.9%, the Bank of Canada might have little reason to lower rates. This difference in economic conditions could benefit the Canadian dollar if U.S. economic growth continues to slow. Create your live VT Markets account and start trading now.

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