USD/CAD remains in a bearish trend, trading below the 50-day EMA at 1.3757 and the 200-day EMA at 1.3854. It peaked near 1.3928 in early January and then formed lower highs and lower lows.
The pair fell 0.25% on Tuesday to 1.3525, as the Canadian Dollar rose for a third straight session. Price is nearing the swing low at 1.3481 within a descending channel, with the 50 EMA turning down towards the 200 EMA.
Key Support And Resistance Levels
Support is at 1.3481, then 1.3500, while resistance is around 1.3600 to 1.3650. A bounce stalled near 1.3700, with rejection candles suggesting selling on rallies.
The Stochastic Oscillator (14, 5, 5) turned lower from the midline without reaching overbought levels. A daily close below 1.3481 would point towards 1.3400, while a move above 1.3650 would alter the near-term outlook.
Canadian data showed January unemployment at 6.5% and wage growth at 3.3%. US Retail Sales were 0.0% versus a 0.4% forecast, and the Employment Cost Index was 0.7% versus 0.8%.
The US Dollar accounts for over 88% of global foreign exchange turnover, or about $6.6 trillion per day (2022). The Fed targets 2% inflation, can use quantitative easing to add liquidity, and can apply quantitative tightening by reducing bond purchases.
Late 2025 And Early 2026 Context
Looking back to this time in early 2025, we were tracking a decisive bearish trend in USD/CAD as it traded well below its key moving averages. The descending channel was clear, and we identified the 1.3481 level as critical support for confirming a further move down. This setup was driven by a combination of strengthening Canadian labour data and softening US economic indicators.
That bearish momentum from last year largely played out as the policy divergence between the central banks became more pronounced. Throughout the second half of 2025, Canadian inflation proved sticky, remaining above 3%, which forced the Bank of Canada to hold its policy rate steady. In contrast, US core PCE inflation cooled to 2.4% by year-end, prompting the Federal Reserve to signal a more dovish stance heading into 2026.
As of today, February 10, 2026, USD/CAD is consolidating around 1.3150 after the pair broke below the 1.3400 handle late last year. Last week’s US jobs report showed a weaker-than-expected gain of 160,000, while Canada’s latest monthly GDP reading for December 2025 surprised to the upside. This fundamental backdrop continues to favor the Canadian dollar over its US counterpart.
Given the persistent downtrend, derivative traders should consider strategies that benefit from further downside or range-bound price action. Buying puts with an expiration in the next 45 to 60 days offers a direct bearish play, targeting a move towards the 1.3000 psychological level. For a more conservative approach, selling out-of-the-money call spreads above the 1.3275 resistance area can generate income while defining risk.
We must remain watchful for any signs of a trend reversal, particularly if the pair begins closing consistently above the former support zone near 1.3200. A sharp, unexpected rise in US inflation figures or a surprisingly dovish turn from the Bank of Canada would be primary catalysts to challenge our bearish view. Until then, the path of least resistance appears to remain lower for the pair.
