USDCAD has been on an upward trend for over six days, climbing from a low of 1.3575 on July 23 to a peak of 1.3853. This gain totals about 278 pips. Recently, the pair broke out of a two-month consolidation, surpassing the June high of 1.37955 and moving above the 100-day moving average at 1.38233. Although it briefly dipped to 1.3813, it quickly bounced back and stayed above the 100-day moving average.

North American Session Analysis

In the North American session, the price retested a level at 1.38268, just above the moving average, showing it has support. Staying above 1.38233 indicates strong bullish control, which gives buyers 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 back to the old resistance ceiling and the June high at 1.37955. Falling back into the previous range could put the recent breakout at risk. We’re seeing a strong bullish breakout in USDCAD, which has risen for six consecutive days. The pair is solidly above the 100-day moving average at 1.38233, which is now a critical support level. As long as the price remains above this mark, we expect bullish momentum to grow in the upcoming weeks.

Upcoming Economic Indicators

This strength comes from different economic signals. Recent data showed that Canadian retail sales for June slowed more than expected, raising concerns about the domestic economy. At the same time, WTI crude oil prices have dropped over 4% in the past week, falling below $80 per barrel, which negatively impacts the commodity-linked Canadian dollar. Looking ahead, everyone is focused on the upcoming US Non-Farm Payrolls report for July, set to release next week. Market speculation suggests a strong number is expected, which would support the Federal Reserve’s current policy and further strengthen the US dollar. This contrasts with rising expectations that the Bank of Canada may need to ease if its economic data continues to weaken. For traders looking for more gains, buying call options is a straightforward way to take advantage of the upside. With the recent sharp move, implied volatility is likely up, so using bull call spreads could be a more cost-effective strategy to aim for a move towards 1.4000 while managing risk. These positions would benefit if the pair continues to rise after the recent breakout. To manage risk, we should keep a close eye on the 1.38233 level. A sustained drop below this moving average and the previous resistance at 1.37955 would indicate a failed breakout. In that case, buying put options could provide a good hedge against long positions or serve as a bet on the pair returning to its earlier trading range. Historically, similar breakouts in USDCAD, like the one in late 2024, often paused to consolidate gains before continuing upward. Traders should not be overly worried about small pullbacks as long as key support levels hold. This pattern suggests that patience may be needed before the next significant move in the trend unfolds. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now