USD/CAD is targeting initial resistance around 1.3970, as indicated by technical analysis. The 14-day Relative Strength Index is at 60, suggesting bullish momentum but not overbought conditions. Initial support is noted at the nine-day Exponential Moving Average near 1.3864, followed by the 50-day EMA at 1.3853.
USD/CAD has decreased slightly after three days of gains, trading near 1.3890 during European hours. The daily chart reveals an ascending channel pattern, indicating a continuous bullish trend. The nine-day EMA is above the 50-day EMA, maintaining a topside bias, while the 50-day EMA is leveling off after a decline, reducing downside pressure.
Testing Resistance Levels
If USD/CAD stays above the short-term averages, it may test resistance around 1.3970, then 1.4014. Potential pullbacks could find support at the nine-day EMA of 1.3864 and at the 50-day EMA at 1.3853. A break below moving averages could shift risk toward the lower boundary around 1.3790 and possibly test the five-month low of 1.3642.
The Canadian Dollar today shows minor percentage changes against major currencies, with the strongest performance against the US Dollar. Data and analysis are provided by Akhtar Faruqui, a Forex Analyst from New Delhi, India.
Looking back at the end of 2025, we saw the USD/CAD pair holding a bullish bias within an ascending channel. The price remained above key moving averages, suggesting dips would be shallow. This technical setup prepared us for a potential retest of the highs seen in early December 2025.
As of today, January 16, 2026, the fundamental picture is reinforcing this view. Recent U.S. inflation data has come in slightly hotter than expected at 3.3%, which may delay the Federal Reserve’s timeline for interest rate cuts. This policy divergence strengthens the U.S. dollar against currencies with a more dovish central bank outlook.
Canadian Economy Overview
Meanwhile, the Canadian economy is showing signs of cooling. The latest jobs report revealed an uptick in the national unemployment rate to 6.2%, and WTI crude oil prices have dipped to around $75 a barrel, weighing on the commodity-linked loonie. The Bank of Canada has also struck a more cautious tone in its recent communications.
For the coming weeks, we should consider strategies that benefit from a rising USD/CAD. Buying call options with strike prices aiming for the 1.4014 resistance level from December 2, 2025, could capture this expected upward move. The support identified last year around the 1.3850 mark remains a key area to watch for potential entry points on any pullbacks.
We must also manage the downside risk inherent in this outlook. A decisive break below the 50-day moving average, near 1.3853, would serve as our signal that the bullish momentum is fading. If the price were to fall below the ascending channel’s lower boundary around 1.3790, we would need to hedge or exit long positions.
