The USDCAD pair fell due to a weak U.S. dollar but found support at a familiar level. It tested the 200-bar moving average on the 4-hour chart, around 1.37844, before bouncing back. Earlier, after the U.S. jobs report, the price dropped below this level but regained strength near the 100-day moving average at 1.37626.

Key Moving Averages

After bouncing off this support, the USDCAD rose above the 100-bar moving average on the 4-hour chart at 1.3814. The key levels to watch are the 100-day MA (1.37626), the 200-bar MA on the 4-hour chart (1.37844), and the 100-bar MA on the 4-hour chart (1.3814). Staying above these levels suggests a bullish outlook for the pair. If the price drops below the 100-day moving average at 1.37626, we could see further declines. Despite declines from Friday’s close, support levels have held, keeping buyers interested and in control. The USDCAD pair is finding solid support at a critical zone created by several moving averages. The price bounced off 1.3784 and is now above 1.3814. This indicates that buyers are defending this area, keeping the immediate outlook positive. The overall market situation also supports this view, especially with the U.S. August 2025 inflation (CPI) data coming next week. Current forecasts suggest a slight increase to 3.2% year-over-year, which may pressure the Federal Reserve to stick to its aggressive policy. This uncertainty about future interest rates is a key reason why the U.S. dollar finds support during dips. On the Canadian side, the recent drop in WTI crude oil prices—from over $95 in July 2025 to around $88—is affecting the loonie. The Bank of Canada hinted at a pause in its rates during its last meeting, contrasting with the Fed’s stance. This weakness in the Canadian dollar supports a stronger USDCAD.

Opportunities and Risks for Traders

For derivative traders, the bounce from support creates a clear chance to position for a rise. We suggest buying near-term call options with strike prices around 1.3850 or 1.3900 for late September 2025 expirations. This allows traders to profit from a potential upward movement as long as the 1.3762 support level holds. However, it’s essential to plan for the opposite scenario. A decisive drop below the 100-day moving average at 1.3762 signals that support has failed, and sellers regain control. In this case, traders should be ready to pivot by buying put options to target lower levels. This price action is familiar and reminds us of the range-bound trading typical in 2023. During that time, the pair was caught between fluctuating central bank expectations and volatile energy markets. The current setup indicates a similar dynamic, making these technical levels crucial to watch in the coming weeks. Create your live VT Markets account and start trading now.

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