The Canadian Dollar (CAD) remains near 1.38, stabilising after a slight dip during overnight trading, affected by the strength of the US Dollar (USD). This behaviour in currency trends is a reflection of the broader USD tone.
The Bloomberg Commodity Index recently hit a three-year high. The significant rise in commodity prices, however, hasn’t bolstered Canadian terms of trade like before, due to lagging energy prices. Comments from President Trump regarding Venezuela’s oil supply further depress these energy prices.
Usdcad Resistance Support Levels
The USD/CAD closed near 1.3805, maintaining the USD’s recent recovery from earlier lows. Resistance is noted in the low 1.38 range, with potential gains to 1.3880 if exceeded. Meanwhile, support levels for the USD are identified around 1.3780/85 and 1.3750. This exchange rate movement continues to be influenced by external economic policies and market responses.
Looking back at the end of 2025, we saw the Canadian dollar holding steady around the 1.38 level against the USD. At that time, a key observation was the disconnect between rising general commodity prices and lagging energy prices, which capped any significant gains for the CAD. This situation left the currency largely following the broader sentiment of the US dollar.
Now, in the first week of January 2026, that dynamic is shifting as a cold snap across North America has helped push WTI crude prices back towards $85 a barrel. This has been coupled with last week’s strong Canadian jobs report, which showed a gain of 45,000 positions, contrasting with a softer-than-expected US non-farm payrolls figure. These factors are providing a tailwind for the Canadian dollar that was absent last month.
Derivative Traders Outlook
For derivative traders, this suggests the resistance in the low 1.38s for USD/CAD will likely hold firm in the coming weeks. We are seeing increased interest in buying CAD calls or USD puts with strike prices anticipating a move back towards the 1.3750 support level noted in December 2025. The strengthening energy outlook provides a fundamental reason to expect the pair to fall from its current position.
However, we must remain cautious as this outlook is highly dependent on central bank policy. The upcoming late January FOMC meeting remains a key risk, as any unexpectedly hawkish commentary from the Federal Reserve could quickly reverse the current trend. A signal that the Fed is concerned about inflation would strengthen the USD and could push the pair through the 1.3820 resistance level.
