The USDCAD has come under pressure as traders couldn’t keep the price above the 1.3759 level in recent sessions. Yesterday, the price peaked at 1.3773 but quickly fell back after failing to sustain that breakout. Support was earlier found around 1.3667, which had previously held strong due to the week’s earlier low points. The price tried to recover but faced resistance at the 200-hour moving average, leading to a failed breakout attempt.

Potential Price Shifts

Right now, attention is on the 200-hour moving average near 1.3699, which is key for potential price changes. If the price falls below this level, particularly the 38.2% retracement at 1.3682, it may signal a further bearish trend, possibly pushing down towards 1.3664–1.3669. To keep a neutral-to-positive outlook, buyers need to regain some ground, targeting the range of 1.3711–1.3715. This includes moving above the 100-hour moving average at 1.37153, with targets around 1.3730 thereafter. Key support levels include the 200-hour moving average at 1.3699, with retracement points at 1.3682 and weekly lows around 1.3664–1.3669. Notable resistance levels are between 1.3711–1.3715, the 100-hour moving average, and up towards 1.3773. Since buyers struggled at the 1.3759 level, there is a chance for short-term bearish opportunities. The immediate focus is on the 200-hour moving average near 1.3699; this is a crucial level for the time being. If this level breaks, we might consider buying put options or setting up bear put spreads aimed at the 1.3664 support area.

Supporting Data

This bearish outlook is backed by recent economic data that weakens the US dollar. The latest Consumer Price Index for June showed a 3.0% year-over-year increase, maintaining a cooling trend that eases pressure on the Federal Reserve to stay aggressive. This macroeconomic headwind aligns with the recent technical failures seen in price movements. On the other side, favorable Canadian data also points towards a dip in the USDCAD. Canada’s June jobs report revealed a boost of over 27,000 positions, surpassing predictions and showing economic strength. Additionally, WTI crude oil prices have risen back above $80 a barrel, giving the commodity-linked Canadian dollar a natural advantage. However, we must consider the important gap in central bank policies. The Bank of Canada has already cut interest rates in June, whereas the Federal Reserve remains steady, creating a rate difference that generally supports a higher USDCAD in the long run. This historical trend suggests that any dip toward the 1.3664–1.3669 support zone might attract notable buying interest. Given these mixed signals—short-term bearish data against long-term bullish policy—we expect increased volatility. A strategy like a long strangle, which involves buying both an out-of-the-money call and put option, could be effective for profiting from significant price movements in either direction. This method allows us to take advantage of a breakout without needing to predict which way it will go in this uncertain market. Create your live VT Markets account and start trading now.

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