The USD\/CAD currency pair has experienced a decline for the second day in a row. It is currently trading around 1.3730, the lowest since 17 September, as it moves below the 200-day Exponential Moving Average of 1.3900, indicating a bearish trend.<\/p>\n
The price is nearing a crucial support level extending from 1.3540. If this support breaks, it could trigger further declines amidst ongoing USD selling. Technical indicators such as the MACD below the Signal line and an oversold RSI at 31 suggest momentum may slow, although a break below the trend-line support is needed to confirm further downside movement.<\/p>\n
Factors affecting the Canadian Dollar include the Bank of Canada’s interest rate decisions, Oil prices, economic health, inflation, and trade balance. Both Canadian GDP data and preliminary US Q3 GDP are expected to influence the USD\/CAD pair. As the long-term moving average remains intact, any price rallies are expected to be corrective, with bearish sentiment prevailing. Conversely, a bullish transition could be indicated by MACD crossing above its Signal line, and a sustained RSI movement towards 40\u201350.<\/p>\n
Canadian oil exports and positive macroeconomic data can lead to a stronger Canadian Dollar. A strong economy and higher interest rates tend to bolster the currency\u2019s value.<\/p>\n
As we approach the end of 2025, the USD\/CAD is hovering just above a critical support level around 1.3730. The technical picture suggests a bearish trend, with the pair trading below its 200-day moving average and recently being rejected from the 1.3800 mark. We are viewing any upward movement as a temporary correction and a chance to position for more downside.<\/p>\n
The Canadian dollar’s strength is being supported by fundamental factors, which reinforces our bearish outlook on the pair. For instance, WTI crude oil prices have held steady above $85 a barrel for most of December, a direct positive for Canada\u2019s export-driven economy. This contrasts sharply with the oil price instability we observed back in the third quarter of 2024.<\/p>\n
Adding to this, the Bank of Canada struck a relatively hawkish tone in its early December meeting, signaling that rate cuts were not imminent due to persistent domestic inflation. This stance was bolstered by November’s jobs report, which showed a net gain of 45,000 jobs, beating expectations and pushing the unemployment rate down to 5.6%. This economic resilience gives the Canadian dollar a clear advantage.<\/p>\n
Meanwhile, the US dollar continues to weaken on growing expectations of Federal Reserve rate cuts in the new year. The Fed’s latest dot plot from its December 2025 meeting now indicates a consensus for two rate cuts in the first half of 2026. This policy divergence between a patient Bank of Canada and a dovish Fed is the primary driver we are focused on.<\/p>\n
For traders, this creates an opportunity to consider buying put options on USD\/CAD with expirations in late January or February 2026. This strategy allows us to capitalize on a potential break below the 1.3725 support while defining our maximum risk during a period of potentially thin holiday liquidity. The Relative Strength Index near 31 suggests the market is nearing oversold, so options can help manage the timing risk of a short-term bounce.<\/p>\n
An alternative is to wait for a confirmed daily close below the ascending trend-line support before entering short futures positions. Any rally back towards the 1.3800 resistance level would present an even more favorable entry point to initiate bearish trades. Given the current setup, we see holding long positions as carrying significant risk heading into January.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" USD\/CAD declines below key support; bearish signals persist amid weak USD, oversold RSI, and technical indicators.<\/p>\n","protected":false},"author":62,"featured_media":16963,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-43454","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\/43454","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=43454"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/43454\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/16963"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=43454"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=43454"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=43454"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}