### USD/CAD Short-Term Momentum The short-term momentum for USD/CAD is strong, staying above the nine-day Exponential Moving Average (EMA). The 14-day Relative Strength Index (RSI) also supports a bullish outlook, remaining above the 50 mark. There’s potential upside for USD/CAD, aiming for the rectangle’s upper limit at 1.4060, along with the seven-month high of 1.4079 from October 14. If the pair breaks through this resistance, it could challenge the psychological level of 1.4100. The main support level is at 1.4000, with the nine-day EMA close by at 1.3994. A drop below these levels might weaken the momentum, leading to a test of the rectangle’s lower boundary around 1.3930, which aligns with the 50-day EMA at 1.3926. If the price falls below this support, it could trigger a bearish trend, pushing the pair down to levels near the August low of 1.3721. Today, the Canadian Dollar performed the weakest against the Australian Dollar compared to other major currencies. ### Options Strategy and Fundamental Drivers With USD/CAD moving above the 1.4000 level, we foresee a clear path toward the 1.4060 resistance in the upcoming weeks. The bullish momentum points to buying call options with a strike price around 1.4050 as a good strategy to take advantage of this upward trend. The Relative Strength Index remains solidly above 50, backing this move. This positive outlook is bolstered by recent US jobs data, which showed over 210,000 jobs added in October, strengthening the US dollar. Meanwhile, WTI crude oil prices have struggled to remain above $75 a barrel, which puts pressure on the Canadian dollar. This difference is a key factor in the strength of the pair. It’s important to consider the risk of a reversal, with initial support at 1.4000. Traders worried about a potential failed breakout might explore buying put options with a strike near 1.3950 to protect against a drop toward the rectangle’s lower boundary. A decline below this area would indicate a big change in market sentiment. The difference in policies between the central banks supports a higher USD/CAD. Canada’s recent inflation figures fell slightly below the Bank of Canada’s target, recalling similar times of widening rate differentials in 2024, which often led to sustained moves in the pair. This context makes it reasonable to hold long USD positions against CAD. As the pair trades within a defined range, a breakout is likely to bring increased volatility. For those expecting a sharp move in either direction but are unsure of which way it will go, a long straddle could be a good strategy. This involves buying both a call and a put option to benefit from a significant price swing away from the current range. Create your live VT Markets account and start trading now.

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