The USDCAD is trading between 1.3812 and 1.38315 today. This range is a narrow 27 pips, and the pair is holding steady near last week’s lows. Last Friday, prices dropped after a speech at Jackson Hole, moving closer to the lower end of the swing area. In early Asian trading today, the high reached 1.3843 before falling to about 1.38161.

London Holiday Impact

The London holiday has led to lower trading volumes, affecting market activity. Traders are paying attention to the rising 100-bar moving average on the 4-hour chart, currently at 1.38016. This level has been strong support in recent weeks. If the price falls below 1.38016, it could change short-term trends and target the 100-day moving average at 1.37676, along with the 200-bar moving average on the 4-hour chart at 1.37539. Buyers want to keep the current consolidation, while sellers are trying to break this key support. Overall, the USDCAD is stuck in a tight range since last Friday’s Jackson Hole speech. For derivative traders, the key level to watch is the rising 100-bar moving average around 1.3801. This level has held steady for weeks, becoming the pivot point for our next moves.

Options Strategy Considerations

With lower trading volumes, selling weekly options could be a good strategy in the near term. An iron condor with strikes outside the 1.3750 to 1.3850 range could help capture premium as the pair consolidates. This strategy benefits from the market’s current indecision and time decay. If there’s a clear drop below 1.3800, buying put options that expire in the next two to three weeks would be wise. This bearish outlook is backed by last week’s Canadian CPI data, which showed core inflation rising to 2.4%. This suggests the Bank of Canada could stay hawkish. A break could set the 100-day moving average near 1.3767 as the first target. Conversely, we should remember a pattern from late 2024 when a similar test of a key moving average led to a strong rally. For traders expecting a bounce, buying call spreads could be a cost-effective way to prepare for a move back toward the 1.3900 highs. This bullish scenario relies on upcoming U.S. ISM manufacturing data, which could strengthen the dollar if it exceeds expectations. Create your live VT Markets account and start trading now.

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