USD/CAD rose for a third day and reached a four-day high near 1.3630 in early European trading. The move followed a rebound from the 1.3500 level and came as the US dollar edged higher.
The US dollar stayed mildly firmer after Wednesday’s Nonfarm Payrolls report reduced expectations for a Federal Reserve rate cut in March. Lower crude oil prices weighed on the Canadian dollar, supporting USD/CAD ahead of US consumer inflation data.
Technical Levels And Momentum
The 100-hour simple moving average is falling at 1.3576, but price remains above it. The RSI is 68, near overbought, and resistance is noted at 1.3641, the 61.8% Fibonacci retracement of last week’s drop.
Further resistance sits at 1.3678, the 78.6% Fibonacci retracement. The MACD is near the zero line with a flat histogram; a break higher could target 1.3700, while a move below 1.3576 would reduce upside bias.
The technical analysis was produced with help from an AI tool.
We are seeing the USD/CAD pair build on its recent rebound from the 1.3500 mark, pushing into the mid-1.3600s this Friday. This upward move is being driven by a combination of a stronger US Dollar and a weaker Canadian loonie. The primary factors at play are divergent economic outlooks and falling oil prices.
Options Strategy Into CPI
The strength in the US Dollar comes after the January 2026 Nonfarm Payrolls report showed a robust addition of 215,000 jobs, crushing expectations and tempering any hope for a Federal Reserve rate cut in March. At the same time, WTI crude oil prices have dipped below $70 a barrel amid concerns over slowing global demand, directly weighing on the commodity-linked Canadian currency. This is a dynamic we saw play out in the second half of 2025, where strong US economic data consistently postponed rate cut expectations and fueled USD strength.
From a derivatives standpoint, this sets up a clear opportunity ahead of the upcoming US Consumer Price Index (CPI) report. A higher-than-expected inflation reading would likely solidify the Fed’s hawkish stance and could propel USD/CAD through initial resistance at 1.3641. Traders could consider buying near-term call options with a strike price around 1.3650, positioning for a potential rally towards the 1.3700 level.
The technical setup supports this bullish view, with the price holding above the key 100-hour moving average near 1.3576. This level should be watched closely as a potential area to manage risk on any long positions. A break below this support would signal that the immediate upward pressure is fading, suggesting a more neutral stance may be warranted.
