The Canadian Dollar (CAD) is mostly unchanged in quiet trading. Weak Asian and soft European markets indicate a cautious mood towards risk. US stock futures showed some gains, while rising US yields and greater short-term US/Canada rate spreads contribute to the CAD’s weaker tone. Scotiabank has revised the fair value (FV) for CAD to 1.3890, up from the low 1.38s earlier this week. On the charts, the USD looks bullish, with patterns suggesting an upward trend. A bullish ‘hammer’ candle is forming on the weekly chart, along with a ‘morning star’ candle reversal on the daily chart. If the USD breaks above the 1.4020/25 area, it may reach new short-term highs over 1.41.

Support Levels And FXStreet Insights

Support is noted at 1.3975 and 1.3890/00. This follows an inverse Head & Shoulders pattern aimed at reaching 1.4025, as previously indicated. The FXStreet Insights Team gathers market views from various analysts. The Canadian dollar appears weak, with this trend likely to continue into November. The main factor is the growing difference between US and Canadian interest rates. Currently, the US 2-year yield is over 50 basis points higher than its Canadian counterpart. This spread, confirmed by recent central bank announcements, makes US dollars more appealing than CAD. Recent data from early October 2025 strengthens the bearish outlook for CAD. The last US jobs report showed strong hiring, while Canada’s employment figures weakened unexpectedly, raising speculation that the Bank of Canada might need to ease policy sooner than the Fed. Additionally, WTI crude oil prices have struggled to stay above $80 a barrel, putting pressure on the commodity-linked currency.

Trading Strategies And Market Dynamics

For traders dealing in derivatives, buying call options on USD/CAD appears to be a straightforward strategy to bet on further CAD weakness. Technical analysis suggests a potential rise toward the 1.41 level if the pair can clearly break the 1.4025 resistance zone. This offers a target for strikes that expire in the coming weeks. Another approach is to take long positions in USD/CAD futures contracts. We’re monitoring the 1.3975 level as an important area of intraday support, which could be an ideal entry point for new trades. The underlying momentum implies that any dips in the exchange rate will likely be bought. This market situation resembles what we saw in late 2023 when the US Federal Reserve’s aggressive policies exceeded those of the Bank of Canada. This led to a sustained rally in USD/CAD toward the 1.39 level. Historical trends demonstrate the impact of these interest rate differences. The technical charts support this fundamental view across different time frames. A bullish ‘hammer’ candle is emerging on the weekly chart, while the daily chart shows a strong reversal pattern from earlier this week. These signals indicate that the recent strength in the US dollar is backed by solid technical foundations and not just a fleeting moment. Create your live VT Markets account and start trading now.

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