The Canadian Dollar remains flat as markets momentarily refocus on fundamentals amidst ongoing geopolitical tensions. Crude oil prices have dipped, with Canadian crude spreads weakening due to pipeline capacity issues, impacting CAD’s value.<\/p>\n
The CAD’s fair value estimate is at 1.3794, close to its spot low, indicating limited upside potential. Recent gains saw CAD reach the upper 1.37 area, meeting short-term targets, but the USD has rebounded.<\/p>\n
The CAD struggles to surpass the low\/mid-1.38s range, with an extension above 1.3845\/50 needed to test the 1.39 zone. Current support levels sit at 1.3780\/90, with further buttresses at 1.3750 and 1.3720.<\/p>\n
The recent rally in the Canadian dollar appears to have run its course, stalling out in the upper 1.37s against the US dollar. We see limited further upside for the CAD, especially as underlying fundamentals like oil prices are not providing support. Data from last week showed a surprise build in U.S. inventories, which has kept WTI crude prices hovering below $80 a barrel, a trend we saw through much of the final quarter of 2025.<\/p>\n
For the coming weeks, this setup suggests positioning for either sideways action or a weaker CAD using options. Buying USD\/CAD call options with a strike price around 1.3800 would provide exposure to a potential move higher with defined risk. This strategy capitalizes on the view that the pair’s downside is limited and a reversal is becoming more likely.<\/p>\n
Specifically, we are watching the 1.3845\/50 level, and a firm break above it could signal a quick return towards the 1.39 zone. A bull call spread, buying a 1.3800 call and selling a 1.3900 call, could be an effective way to target this potential move while reducing the upfront premium cost. This trade profits if the USD\/CAD pair rises but caps the potential gain if it moves beyond 1.39.<\/p>\n
This outlook is reinforced by the diverging paths of our central banks. Looking back, we saw the Bank of Canada adopt a more dovish tone in its December 2025 meeting compared to the Federal Reserve. Current swaps markets are pricing in a much higher probability of a BoC rate cut by spring than for the Fed, which helps explain the US dollar’s resilience.<\/p>\n
Broader geopolitical tensions, which we recall from the shipping disruptions in late 2024 and 2025, remain a key risk factor that typically benefits the US dollar as a safe haven. If a trader believes these risks will keep the pair range-bound instead of trending, selling volatility through an iron condor with strikes set outside the 1.3720 to 1.3850 range could be a viable strategy. This would profit from a lack of significant movement in either direction over the next several weeks.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Canadian Dollar remains flat amid geopolitical tensions, weakened crude prices, and technical resistance near 1.3845\/50.<\/p>\n","protected":false},"author":62,"featured_media":16965,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-39873","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/39873","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=39873"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/39873\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/16965"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=39873"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=39873"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=39873"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}