The USDCAD is showing a bullish trend, with important resistance levels between 1.38279 and 1.3833. These levels are highlighted by the 100-day moving average and the 61.8% retracement from the decline in May. The pair is currently above the June high of 1.37969, which is crucial for maintaining its upward movement. Resistance levels at 1.38279 and 1.38335 may attract short-term sellers looking to take profits. If the price breaks above these levels, it could increase buyer confidence, leading to further upward movement. Right now, the USDCAD is down by 560 pips, or 3.968%, year-to-date, which helps the Canadian inflation outlook.

USDCAD Buy Signal Potential

Despite the current decline, there is a chance to “buy US dollars.” However, breaking through the 100-day moving average is key for a stronger bullish outlook. In the past, USDCAD fluctuated within a range starting in November following a rise from September 2024, with spikes related to tariff worries. As tariff concerns eased, the currency pair moved outside this range, eventually dropping to the 2025 low. The current correction is moderate but nearing a significant turning point for USDCAD. The USDCAD remains above the June high of 1.37969. Staying above this level is essential for the uptrend to continue in the coming days. For traders, this level acts as a critical marker for current bullish momentum.

Resistance Challenges Ahead

We are nearing a key resistance zone between 1.3828 and 1.3833. This area, including the 100-day moving average, is a logical point for profit-taking. The recent US jobs report showed 285,000 new job additions, strengthening the case for a stronger dollar and making a breakthrough at this resistance more likely. If the pair moves decisively above 1.3833, traders may consider buying call options to take advantage of further upside. This would indicate a greater buyer confidence and could lead to a more significant upward move. Such a breakout would suggest that the recent “buy US dollar” sentiment is gaining momentum. On the Canadian side, the fundamentals also support a higher USDCAD. The latest inflation data for Canada was 2.7%, slightly below expectations, reducing pressure on the Bank of Canada to act aggressively. Additionally, WTI crude oil prices recently dipped to around $81 a barrel, which poses a challenge for the loonie. However, if sellers manage to defend the 1.3833 resistance level, it may open up opportunities for more cautious strategies. Traders could consider buying put options or creating bear call spreads, betting on a retreat toward the 1.3796 support. This scenario becomes more likely if we see a sudden rise in oil prices or unexpectedly strong Canadian economic data. Even with the recent rally, USDCAD remains down nearly 4% for the year 2025. It’s important to remember that the market was mainly range-bound in late 2024, with tariff concerns causing temporary spikes that eventually faded. This current upward movement is still a correction within that larger downtrend. Create your live VT Markets account and start trading now.

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