The USDCAD is trading between 1.3812 and 1.38315. The pair is consolidating near last week\u2019s lows within a narrow 27-pip range today.<\/p>\n
Last Friday, the price fell after a speech at Jackson Hole, moving towards the lower end of the swing area. In early Asian trading today, the high hit 1.3843 before dropping to near 1.38161.<\/p>\n
The London holiday has resulted in reduced trading volumes, affecting activity levels. Traders are observing the rising 100-bar moving average on the 4-hour chart at 1.38016, serving as consistent support over recent weeks.<\/p>\n
A break below 1.38016 could alter near-term trends, possibly targeting the 100-day moving average at 1.37676 and the 200-bar moving average on the 4-hour chart at 1.37539. Buyers are focused on maintaining the current consolidation, while sellers aim to break through this technical support level.<\/p>\n
We see the USDCAD is caught in a tight range following last Friday’s Jackson Hole speech. For derivative traders, the critical level to watch is the rising 100-bar moving average on the 4-hour chart, now around 1.3801. This level has been a floor for weeks, making it the pivot point for our next move.<\/p>\n
Given the current low volume, selling weekly options could be a viable strategy for the immediate future. An iron condor with strikes set outside the 1.3750 to 1.3850 range could capture premium as the pair consolidates. This play benefits directly from the market’s current indecision and time decay.<\/p>\n
If we see a decisive break below 1.3800, buying put options expiring in the next two to three weeks makes sense. This bearish view is supported by last week’s Canadian CPI data, which showed core inflation ticking up to 2.4%, suggesting the Bank of Canada might remain hawkish. A break would put the 100-day moving average near 1.3767 in play as an initial target.<\/p>\n
On the other hand, we must consider the pattern from late 2024, when a similar test of a key moving average preceded a sharp rally. For traders anticipating a bounce, buying call spreads would be a cost-effective way to position for a move back toward the 1.3900 highs. This bullish case hinges on the upcoming U.S. ISM manufacturing data, which could reinforce dollar strength if it beats expectations.<\/p>\n
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