The USDCAD pair is on the rise, currently trading in a swing area between 1.3891 and 1.3904. If it breaks above this zone, it could reach the 38.2% retracement level of the March 4 decline at 1.39229. This level is crucial for buyers looking to regain control after a recent downturn. The movements have been encouraging. The pair crossed above the 100- and 200-bar moving averages on the 4-hour chart at 1.37966 and 1.3742, respectively, as well as the 100-day moving average at 1.3769. Notably, on Tuesday, it broke through a previous swing zone from 1.3812 to 1.38215, reflecting strong upward momentum.

Hourly Chart Movements

On the hourly chart, the price dipped below the 100-hour moving average of 1.3838 on Monday but bounced back quickly, boosting buyer confidence. The rally then continued past the August 1 high of 1.38785, maintaining its upward trend today. For intraday traders, a close risk level is at 1.3875, the August 1 high. More conservative traders might look at the rising 100-hour moving average at 1.3838 as their risk point. As long as these support levels hold, the momentum favors further upward movements. The USDCAD is showing strong upward momentum, approaching a key resistance zone between 1.3891 and 1.3904. Buyers are in command, driving prices above several important moving averages. A breakout above this area would confirm that the current bullish trend has room to extend.

Economic Factors and Market Dynamics

This technical strength is supported by diverging economic data. The latest US Core PCE data for July was 3.1%, slightly above expectations, suggesting the Federal Reserve will likely keep interest rates steady for the remainder of the year. In contrast, Canada recently reported a surprising loss of 15,000 jobs, raising worries about an economic slowdown. Adding further pressure on the Canadian dollar, WTI crude oil prices have dipped below $75 a barrel due to renewed concerns about global demand. This environment supports a stronger US dollar compared to the Canadian dollar. The current market conditions remind us of the late 2022 setup when hawkish Fed policies significantly strengthened the dollar. For those trading derivatives, this may be an opportunity to position for more upside, such as buying call options with strike prices above 1.3900. Intraday risks can be managed against the 1.3875 level, while traders holding long-term futures positions should monitor the 100-hour moving average around 1.3838 as a key support. The most critical level to watch is 1.39229, which marks the 38.2% retracement of the decline from the March 4, 2025 high. A sustained move above this level would confirm that the downtrend from earlier this year is reversing. Until we see that, buyers have the edge but have not yet won the larger battle. Create your live VT Markets account and start trading now.

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