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    USD/CAD tests lower boundary of ascending channel near 1.3990 after losses

    by VT Markets
    /
    Oct 23, 2025

    Testing Support Levels

    The USD/CAD pair is currently testing support around 1.3980, which is the lower edge of its rising channel. If it falls below this level, we could see it drop to the 50-day EMA at 1.3907. Further declines might impact momentum in the medium term, potentially bringing it down to a three-month low of 1.3721. Today, October 23, 2025, the Canadian Dollar shows varying strength against major currencies, particularly strong against the Japanese Yen. A heat map highlights these fluctuations, with the Canadian Dollar as the base currency compared to others. As of now, the USD/CAD pair is at a crucial point around 1.3980. While the overall trend remains positive, short-term momentum is weakening. This suggests that the next few trading sessions will be important for determining the direction in November.

    Opportunity for Derivative Traders

    Current economic data favors a stronger US dollar, making it risky to short the pair. The latest US Consumer Price Index for September 2025 was slightly above expectations at 3.8%, which puts pressure on the Federal Reserve to keep its aggressive policy. Meanwhile, the Bank of Canada has indicated it will remain steady due to a slowing domestic economy. Additionally, West Texas Intermediate crude oil prices have dropped to about $82 a barrel this month due to concerns about global growth, which negatively impacts the Canadian dollar. This contrast between a solid US economic outlook and a weaker Canadian one suggests that the USD/CAD pair may rise. A similar trend was seen in the fall of 2022 when aggressive Fed policies led to significant gains for USD/CAD. For derivative traders, there’s a clear opportunity if the 1.3980 support level holds. We might consider buying call options with a strike price at or above the significant 1.4000 level, aiming for a retest of the recent high at 1.4079. However, if the price convincingly drops below this channel, it will indicate a trend change, making put options with a strike around 1.3950 a smart hedge against a potential move down toward 1.3900. Create your live VT Markets account and start trading now.

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