Canadian Dollar Performance Against Major Currencies

The USD/CAD currency pair is currently around 1.4050, showing a strong upward trend on the daily chart. The pair is close to the nine-day Exponential Moving Average (EMA) of 1.4036, and the 14-day Relative Strength Index (RSI) is above 50, indicating continued bullish momentum. There is a chance for USD/CAD to test its seven-month high of 1.4140. If it succeeds in breaking this level, the pair could move towards the upper limit of the ascending channel at 1.4190. Watch for support levels at the nine-day EMA of 1.4036 and the channel’s lower boundary around 1.4000. If the pair falls below the 50-day EMA of 1.3969, market sentiment may turn bearish, possibly revisiting the three-month low of 1.3721. Overall, the currency heat map reflects changes, highlighting that the Canadian Dollar is performing particularly well against the Australian Dollar. Traders and analysts are closely watching currency movements in the forex market. FXStreet recommends thorough research before making any investment choices, noting that participating in the market involves the risk of losses. The information provided is purely for informational purposes and not intended as investment advice.

Investment Strategies and Risks

With the USD/CAD pair steady at around 1.4050, the technical indicators suggest continued upward activity within its rising channel. The Relative Strength Index is above 50, showing that bullish momentum persists. The nine-day EMA at 1.4036 is the first support to consider in this trend. This positive outlook is supported by recent news, as the US reported an unexpected increase in Non-Farm Payrolls for October 2025, adding 210,000 jobs. A strong US labor market means the Federal Reserve is unlikely to reduce interest rates soon. This supports a potential test of the recent high at 1.4140. Conversely, the Canadian economy is slowing down, with the latest inflation data for October 2025 dropping to 2.6%, near the Bank of Canada’s target. This raises expectations that the BoC might loosen its policies before the Fed, creating a policy gap that could push USD/CAD higher. This situation resembles a similar divergence seen in late 2023 that boosted the pair. Additionally, West Texas Intermediate (WTI) crude oil prices have fallen over 5% in the past two weeks, now around $76 per barrel. Lower oil prices, which impact the Canadian economy significantly, typically weaken the loonie. Given this context, USD/CAD seems likely to rise. In the coming weeks, strategies that capitalize on a rise toward the 1.4190 upper channel boundary could be effective. Consider buying call options with a strike price of 1.4150, expiring in December 2025 or January 2026, to take advantage of this expected increase. Options provide defined risk, making them useful in this trending market. Alternatively, for those who feel neutral to bullish about the situation, selling put spreads with a short strike below the critical 1.4000 support could help collect premium. This strategy benefits from rising prices and time decay, as long as the pair remains above this support level. The main risks to this perspective include sudden shifts in oil prices or unexpectedly weak US economic data. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now