USDCAD has reached new lows in 2025 as the Canadian dollar strengthens due to rising oil prices, leading to a decrease in demand for the U.S. dollar. The exchange rate has dropped to 1.3574, its lowest since October 2024. The currency pair fell below a crucial technical range of 1.36038 to 1.36337, which includes last week’s low. Staying under this range continues downward pressure, increasing short-term selling. If this trend persists, the rate could approach 1.3500, with last September’s low at 1.34198. Current market conditions point to further declines as USDCAD trades within levels last observed between August and October 2024. The Canadian dollar’s rise—backed by strong oil prices—has pushed the USD/CAD pair to levels not seen since last autumn. Falling below the earlier support zone of 1.36038–1.36337 indicates that sellers remain confident. The daily closures below this zone suggest resistance against rallies, reflecting changes in capital flows and regional expectations. As USDCAD stays within historically significant price zones last accessed between late summer and mid-autumn of 2024, it approaches the 1.3500 mark and just below it, last September’s 1.34198. Breaking through these levels could spark more downward momentum. While this isn’t necessarily a steep decline, it could adjust derivative contracts in response to ongoing weakness. We believe a short position remains valid as long as the important levels mentioned earlier are not regained confidently. The market is behaving in ways that suggest adjustments in expectations regarding monetary policy differences, particularly how oil-linked currencies react to prolonged inflation signals. It’s important to remember that support levels hold due to trader positioning, not mere expectation. Once a support level breaks, market flows can quickly become one-sided. Without a significant reaction near previously tested lows, we assume further weakness is more likely than a reversal. Volume profiles and commitment from institutional players also favor continuation. Recent sessions show fewer hesitations, with more traders entering with clear directional intent. Long-term options are leaning towards more downside bets, hinting at positioning before upcoming economic data. Over the next few weeks, it’s reasonable to focus on how prices react around 1.3500 and if flows strengthen below that. Additionally, interbank forward pricing has shifted to reflect a new balance of expectations. This indicates that even at different time frames, the risk premium is no longer biased towards the U.S. What we are witnessing is not just a slow drift, but a recognition of momentum, supported by a more stable oil market and narrowing yields. This environment makes sudden reversals less likely. For those observing hourly and daily trends, the absence of strong upward movements after minor recoveries stands out. Repeated rejections near resistance points further support the gradual weakening of the U.S. dollar in this pair. In the coming days, we may gain more clarity as liquidity returns after the recent long weekend in North America, possibly increasing volume in pending orders. Until then, the reaction at key technical levels—rather than headlines—will shape early Q2 positioning.

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