USD/CAD has recently broken free from its multi-month consolidation and has moved above the 200-day moving average. The daily MACD is still positive, suggesting the possibility of more gains, with target levels around 1.4110–1.4165. If there’s a short-term pullback, support may be found at the recent low of 1.3930. The pair is approaching a potential resistance zone, according to a group of FX analysts.

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Strategic Implications For USD/CAD

The recent rise in USD/CAD above its 200-day moving average indicates a focus on bullish strategies. The momentum is strong, and the path to the 1.4110 area looks promising. This points to a potential for further gains in the US dollar against the Canadian dollar. Fundamental factors support this outlook. The September 2025 US inflation data showed a higher-than-expected rate of 3.8%, prompting the Federal Reserve to remain vigilant. Meanwhile, the Bank of Canada is dealing with a slowing economy, as evidenced by the latest jobs report showing unemployment rising to 6.4%. Additionally, the drop in WTI crude oil prices below $83 a barrel is putting pressure on the loonie. For those wanting to take advantage of this trend, buying call options with November or December 2025 expirations could be an effective strategy. A bull call spread, such as buying a 1.4000 call while selling a 1.4150 call, allows for a risk-defined approach to target the expected resistance zone. This method helps reduce initial costs while aiming to capture the anticipated upward movement. Alternatively, if the downside seems limited, selling put credit spreads with the short strike below the 1.3930 support level could generate income. This strategy benefits from rising prices and time decay, provided the pair remains above the key support level. Similar patterns of US dollar strength were observed during 2022-2023 when central bank policies diverged significantly. Create your live VT Markets account and start trading now.

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