USD\/CAD was steady early Monday, finding support near 1.3645 but staying below 1.3700 in the early European session. The pair paused after last week\u2019s pullback from around the monthly high, with price action still muted.<\/p>\n
The US Dollar eased after reaching its highest level since January, following new US tariffs of 15% announced by President Donald Trump. This added to USD selling pressure, while weaker crude oil prices supported USD\/CAD by weighing on the commodity-linked Canadian Dollar.<\/p>\n
Oil moved down from an over six-month high on worries about trade-war effects on growth and fuel demand. These moves left USD\/CAD pulled between a softer USD and a weaker CAD.<\/p>\n
On the charts, USD\/CAD has failed several times above 1.3700, forming a bearish double-top on the daily timeframe. The 200-period Simple Moving Average on the 4-hour chart slopes lower at 1.3718 and has capped rebounds.<\/p>\n
Momentum measures point to downside bias, with the MACD line below the Signal line and the histogram negative. The RSI is 49, just below its midline.<\/p>\n
Looking back at the analysis from early 2025, the bearish technical setup for USD\/CAD proved prescient. The repeated failure at the 1.3700 level, which we noted at the time, was a clear signal of weakness. The “sell America” trade, sparked by the 15% global tariffs, did indeed pressure the US Dollar throughout that year, causing the pair to break down significantly.<\/p>\n
While weaker oil prices provided some support for the pair in early 2025, that dynamic has since reversed. With West Texas Intermediate (WTI) crude now holding firm above $85 a barrel, the commodity-linked Loonie has a significant tailwind. This strength is reinforced by the Bank of Canada, which is holding its policy rate at 3.0% to combat persistent inflation, recently reported at 3.2% for January.<\/p>\n
The divergence in central bank policy is a critical factor for traders to consider. Following the economic slowdown from the 2025 tariff shock, the US Federal Reserve’s key rate now stands at 2.5%, a full 50 basis points below the Bank of Canada’s. This rate differential makes holding the Canadian Dollar more attractive and should continue to weigh on the USD\/CAD pair.<\/p>\n
For the coming weeks, we believe derivative strategies should lean towards further downside in USD\/CAD. Traders could consider buying put options to directly profit from a decline below the current 1.3250 level. Alternatively, selling call spreads with a ceiling around the 1.3400 mark offers a way to generate income, based on the view that the pair’s upside remains heavily capped.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" USD\/CAD steadied near 1.3645 as softer USD and weaker oil-linked CAD kept price below 1.3700.<\/p>\n","protected":false},"author":62,"featured_media":16961,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-42560","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\/42560","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=42560"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/42560\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16961"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=42560"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=42560"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=42560"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}