USD/CAD fell for a fourth day, sliding to a near two-week low around 1.3525–1.3520 in Asia. The move followed two-way trading the prior day, with a weaker US Dollar and firmer crude oil supporting the Canadian Dollar.
Market focus turned to the US Nonfarm Payrolls report for the next catalyst. The US Dollar was weighed by expectations of more Federal Reserve rate cuts and concerns about the Fed’s independence.
Usd Cad Technical Levels
On charts, USD/CAD traded below the 50-day EMA at 1.3757 and the 200-day EMA at 1.3854 after peaking near 1.3928 in early January. The pair was down 0.25% on Tuesday to 1.3525, with support at 1.3481, then 1.3500, and resistance around 1.3600–1.3650.
The early-February bounce stalled near 1.3700, and the Stochastic Oscillator (14, 5, 5) turned lower from the midline. Canadian January unemployment fell to 6.5% and wage growth held at 3.3%, while US Retail Sales were 0.0% versus 0.4% forecast and the Employment Cost Index was 0.7% versus 0.8%.
We see the Canadian dollar’s strength against the US dollar as a trend with room to run, driven by diverging economic signals. The technical picture shows a clear descending channel, with the pair trading well below key moving averages. This suggests that selling into any minor rally remains the prevailing strategy.
The strength in crude oil is a significant factor supporting this view, with West Texas Intermediate recently holding firm above $80 a barrel. This provides a fundamental tailwind for the commodity-linked Canadian dollar, weighing on the USD/CAD pair. We believe this external support for the loonie makes short positions on the pair more attractive.
Trading Plan For Nfp
The upcoming US Nonfarm Payrolls report is the key event risk on the horizon. Given the recent volatility, we should consider using options to express a bearish view while managing risk. Buying put options on USD/CAD could be a way to profit from a continued slide, especially if the US jobs data comes in weaker than expected.
Looking back at the economic data from late 2025, we saw the US economy showing signs of cooling while Canadian labour markets remained tight. For instance, the US added a moderate 216,000 jobs in its December 2025 report, but underlying metrics suggested a slowdown. This pattern has continued, reinforcing the Federal Reserve’s path toward potential rate cuts.
In contrast, Canada’s latest inflation reading for January came in at a persistent 2.9%, keeping the Bank of Canada on a more cautious footing. This policy divergence is the central theme we are trading. The widening gap between US and Canadian interest rate expectations should continue to pressure USD/CAD lower.
Technically, the 1.3481 level is critical support. A decisive break below this would open the door to a move toward 1.3400. We could structure bearish strategies, such as put debit spreads, to target this next leg down with a defined risk profile.
Historically, periods of diverging central bank policy have led to sustained trends, as we saw between 2015 and 2017. The current environment feels similar, suggesting this isn’t just a short-term move. Therefore, positioning for further downside in USD/CAD over the coming weeks appears to be the most prudent approach.
