USDCAD is currently testing the resistance level at 1.3710 amid a consolidation phase. The pair has been trading within a range of 1.3651 to 1.3710 for six days.<\/p>\n
On Monday, USDCAD moved towards the resistance but encountered selling pressure. Support was found near 1.36697, coinciding with previous swing lows, allowing a rebound during the U.S. session due to renewed dollar interest.<\/p>\n
The 1.3707\u20131.3710 resistance zone has repeatedly blocked rallies since last Tuesday. Despite a brief breach of this zone on Friday driven by U.S. tariff news, the pair quickly fell back, reaffirming 1.3710 as a barrier. A confirmed breakout above 1.3710 may enhance bullish sentiment.<\/p>\n
For a stronger bullish outlook, levels at 1.37208 and 1.3730 need to be surpassed. Conversely, failure to maintain above these levels could see sellers eyeing support at the 100-hour MA (1.3687) and 200-hour MA (1.3659). Falling below these may favour a bearish stance.<\/p>\n
Overall momentum suggests an upward tilt, but a decisive break above 1.3710 is awaited. Traders are monitoring for a potential breakout. Key levels include resistance at 1.3707\u20131.3710, 1.3730, and 1.3759; support lies at 1.3687, 1.3659, and 1.3631.<\/p>\n
The consolidation phase described has this pair looking like a coiled spring, and we’re positioning for the inevitable release. The repeated failure at the key resistance zone suggests that selling premium is the immediate play for us. With realized volatility being crushed in this tight channel, we see an opportunity in selling out-of-the-money strangles, perhaps targeting strikes below 1.3631 and above 1.3759 to collect theta while the market waits for a catalyst. Each failed test of the highs reinforces this range, making it a calculated income strategy for the near term.<\/p>\n
However, we must prepare for the break. The fundamental picture is what will likely decide the direction. On one hand, the Bank of Canada held rates at 4.75% in its July meeting but signaled increasing concern about a slowing economy, opening the door for a September cut. This is CAD-negative. Yet, we see WTI crude prices holding firmly above $80 a barrel, which historically provides a supportive tailwind for the loonie.<\/p>\n
Counterbalancing this is the view from the U.S. side. The Federal Reserve’s preferred inflation gauge, the Core PCE price index, just hit 2.6% for the year ending in June\u2014its lowest level since March 2021. This cooling inflation gives the Fed room to be patient, potentially weighing on the dollar. Given this tug-of-war, we’re not just selling volatility; we’re setting alerts to buy it.<\/p>\n
Should the pair achieve a convincing daily close above the 1.3730 high, we will look to purchase bull call spreads to play a move toward the 1.3800 handle. This offers a defined-risk way to participate in a breakout, mitigating the risk of another false move like the one seen on Friday. Conversely, a decisive break of the 200-hour moving average, currently near 1.3659, would have us buying bear put spreads. Historically, when such a clear technical range finally snaps after multiple tests, the follow-through can be swift and bypass intermediate support levels. Our stance is to profit from the current stagnation but be ready to pivot aggressively once either the bulls or bears prove they can hold new ground.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" USDCAD tests 1.3710 resistance; breakout could fuel bullish momentum, while support holds near key averages.<\/p>\n","protected":false},"author":62,"featured_media":16967,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-26484","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-ca\/wp-json\/wp\/v2\/posts\/26484","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=26484"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/26484\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16967"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=26484"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=26484"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=26484"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}