USDCAD is on a steady rise, gaining for six days in a row. It climbed from a low of 1.3575 on July 23 to a high of 1.3853, marking an increase of about 278 pips. Recently, the pair broke out of a two-month consolidation range, moving past June’s high of 1.37955 and rising above the 100-day moving average at 1.38233. It briefly dipped to a session low of 1.3813 but quickly bounced back, staying above the 100-day moving average.

North American Session Analysis

In the North American session, the pair dipped to 1.38268, just above the moving average, showing strong support. Staying above 1.38233 indicates bullish control, boosting buyer confidence. The close yesterday at 1.38292 created a support zone. If USDCAD drops below this level and the 100-day moving average, attention will shift to the prior ceiling and June’s high at 1.37955. Falling back into the previous range could raise doubts about the breakout’s strength. USDCAD is showing a strong bullish breakout after six consecutive days of gains. It remains above the 100-day moving average at 1.38233, which is acting as an important support level. As long as the price stays above this point, we expect bullish momentum to grow in the coming weeks.

Upcoming Economic Indicators

This strength comes from differing economic signals. Recent data revealed that Canadian retail sales for June slowed more than expected, raising worries about the economy. At the same time, WTI crude oil prices have dropped over 4% in the last week, falling below $80 per barrel, which negatively impacts the commodity-linked Canadian dollar. Looking forward, everyone is waiting for the US Non-Farm Payrolls report for July, set to be released next week. There are expectations for a solid number, which would support the Federal Reserve’s current policy and further strengthen the US dollar. This contrasts with growing speculation that the Bank of Canada may need to consider easing if its economic data continues to weaken. For traders looking for more gains, buying call options is a straightforward way to tap into potential upside. Given the recent surge, implied volatility has likely gone up, making bull call spreads a potentially cheaper strategy to target a move towards the 1.4000 level while controlling risk. These positions would profit if the pair keeps moving upward after the breakout. To manage risk, keep a close eye on the 1.38233 level. A sustained drop below this moving average and the earlier resistance at 1.37955 would indicate that this breakout has failed. In that case, purchasing put options could be a smart hedge against long positions or a standalone bet on the pair returning to its prior trading range. Historically, similar breakouts in USDCAD, like those seen in late 2024, often pause to consolidate before continuing higher. Traders should not worry too much about minor pullbacks as long as key support levels remain intact. This pattern suggests that patience may be necessary before the next major move in the trend. Create your live VT Markets account and start trading now.

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