The Canadian Dollar (CAD) is stable against the US Dollar (USD), trading within key technical ranges. Scotiabank’s strategists, Shaun Osborne and Eric Theoret, highlight a flat trading pattern and note market expectations about the Bank of Canada’s policy. In the short term, the outlook depends on a speech by Senior Deputy Governor Rogers. Yield spreads and the options market show a neutral position, with risk reversals remaining steady. Scotiabank estimates the fair value for USD/CAD is 1.3744, suggesting that the CAD is undervalued.

Technical Levels of USD/CAD

The USD/CAD pair is consolidating near the 61.8% retracement level of a previous rally at 1.3944. Resistance is at the 200-day moving average of 1.3978, just below the 1.40 psychological mark. If it falls below 1.3900, it may target the 50-day moving average at 1.3835, with a trading range expected between 1.3920 and 1.3980. As of October 9, 2025, the Canadian dollar is moving sideways against the US dollar, remaining in a tight range. This indicates that traders are waiting for clear signals before making significant moves. For now, expect continued consolidation between the 1.3920 and 1.3980 levels. This holding pattern aligns with mixed signals from the central banks. The Bank of Canada has confused the market, especially after the September inflation rate hit 2.8%, still above the 2% target. All attention is on Senior Deputy Governor Rogers’ upcoming speech for clues about the end of rate hikes from 2024.

US and Canadian Economic Indicators

Meanwhile, the US economy is showing signs of slowing down, with last week’s jobs report indicating a slowdown in hiring. This has kept the Federal Reserve cautious, preventing US yields from rising and keeping the USD/CAD pair steady. The options market reflects this uncertainty, with little interest in betting on large price swings in the near future. Our models suggest that the fair value for the USD/CAD exchange rate is around 1.3744. This means the Canadian dollar is undervalued at the moment, posing potential downside risks for the currency pair. Derivative traders might consider strategies that profit from low volatility, such as selling out-of-the-money call options above the 1.4000 resistance level. We should keep in mind the rapid rise in USD/CAD from September 2024 to February 2025, which established the current technical levels. This quiet period highlights the market processing those earlier movements. A break below the 1.3900 support level could indicate a move back toward fair value. Create your live VT Markets account and start trading now.

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