USD/CAD stays in a bearish trend. It trades below the 50-day EMA at 1.3757 and the 200-day EMA at 1.3854. The pair topped near 1.3928 in early January, then began making lower highs and lower lows.
On Tuesday, USD/CAD fell 0.25% to 1.3525 as the Canadian Dollar strengthened for a third straight session. Price is now close to the swing low at 1.3481 inside a descending channel. The 50 EMA is also turning down toward the 200 EMA.
Key Support And Resistance Levels
Support sits at 1.3481, then 1.3500. Resistance is around 1.3600 to 1.3650. A rebound stalled near 1.3700, and rejection candles suggest sellers are stepping in on rallies.
The Stochastic Oscillator (14, 5, 5) turned lower from the midline and did not reach overbought. A daily close below 1.3481 would open the door to 1.3400. A move above 1.3650 would change the near-term view.
In Canada, January unemployment came in at 6.5% and wage growth was 3.3%. In the US, Retail Sales were 0.0% versus a 0.4% forecast, while the Employment Cost Index was 0.7% versus 0.8%.
The US Dollar makes up over 88% of global FX turnover, or about $6.6 trillion per day (2022). The Fed targets 2% inflation. It can add liquidity through quantitative easing and tighten policy through quantitative tightening by reducing bond purchases.
Late 2025 And Early 2026 Context
In early 2025, USD/CAD was in a clear downtrend and traded well below key moving averages. The descending channel was easy to see, and we highlighted 1.3481 as a key support level. A break below it would confirm more downside. The setup was supported by stronger Canadian labor data and softer US indicators.
That bearish move largely played out as central bank policy paths split further. In the second half of 2025, Canadian inflation stayed sticky above 3%, which kept the Bank of Canada on hold. Meanwhile, US core PCE inflation cooled to 2.4% by year-end, leading the Federal Reserve to signal a more dovish tilt going into 2026.
As of today, February 10, 2026, USD/CAD is consolidating near 1.3150 after breaking below 1.3400 late last year. Last week’s US jobs report showed a weaker-than-expected gain of 160,000. Canada’s December 2025 monthly GDP report also beat expectations. This backdrop still supports the Canadian dollar versus the US dollar.
With the downtrend still in place, derivatives traders may favor strategies that benefit from further downside or sideways action. Buying puts with 45 to 60 days to expiry is a direct bearish approach, with a possible move toward the 1.3000 psychological level. A more conservative alternative is to sell out-of-the-money call spreads above the 1.3275 resistance area to collect premium while capping risk.
Still, watch closely for signs of a reversal, especially if the pair starts closing consistently above the former support area near 1.3200. A sharp upside surprise in US inflation, or an unexpectedly dovish shift from the Bank of Canada, would be the main risks to the bearish view. Until then, the bias remains lower.
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