USD/CAD is currently trading around 1.3870, testing the upper limit of an upward channel. The 14-day Relative Strength Index (RSI) is at 60.8, indicating a strong bullish trend and supporting the pair’s upward movement. The pair remains strong as it trades above both the nine-day and 50-day Exponential Moving Averages (EMAs). Staying above the 50-day EMA at 1.3845 keeps an upward bias, targeting 1.4014 if it breaks through the channel’s boundary.

Key Support and Resistance Levels

If the price drops below the nine-day EMA at 1.3788, it may hinder progress and shift focus to key support levels. The lower boundary of the ascending channel at 1.3730 is critical support; breaking below this could lead to testing 1.3642. The CAD has shown strength against the Australian Dollar and other major currencies. It appreciated by 0.33% against the AUD but dropped 0.15% against the USD. Here’s how the CAD performed against other currencies: – USD -0.01% – EUR 0.07% – GBP -0.14% – JPY 0.15% – AUD 0.33% – NZD 0.31% – CHF -0.02% These figures highlight CAD’s changing market position.

Currency Market Outlook

Looking back at early 2025, the bullish outlook for USD/CAD was correct as the pair broke above the 1.4000 level later that year. We now see the pair trading near 1.4150, driven by a clear difference in economic momentum between the US and Canada. This persistent strength suggests that strategies favoring further upside might be wise. The gap between central bank policies is widening, which supports the US dollar. Last week’s US Non-Farm Payrolls report showed an unexpected gain of 215,000 jobs, while Canada’s jobs report revealed a loss of 10,000 jobs. This reinforces expectations that the Bank of Canada may need to consider cutting rates before the Federal Reserve does. Additionally, the Canadian dollar faces pressure from softer energy markets, which have historically impacted its value. WTI crude oil prices are currently around $75 per barrel, significantly lower than the highs seen in the third quarter of 2025. When oil prices stay below $80 for an extended period, it usually weakens the CAD. Given these conditions, we recommend buying near-term call options on USD/CAD over the coming weeks. A target strike price of around 1.4250 could offer a favorable risk-reward profile, taking advantage of the current momentum. Traders should keep an eye on upcoming inflation data from both countries for the next major market influence. Create your live VT Markets account and start trading now.

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