The USDCAD moved above the 200-hour MA at 1.37817 and the 100-day MA at 1.37876 in a recent session. Despite these technical breaks, which often indicate potential upward momentum, the rally quickly lost traction, and the price fell below both moving averages.
For those looking to sell USD or buy CAD, the 100-day MA serves as a point for establishing short positions. Should the price continue to drop, the targets include the 38.2% retracement at 1.37626 and the 100-hour MA at 1.3754.
Focus On Retracement Levels
A further decrease in price could bring the focus to the 50% retracement as the next support area. Reflecting on the previous week’s activity, the pair fell below the 50% retracement but then reversed, showing the potential for such a shift again.
Traders should exercise caution with failed breaks, as they may not guarantee sustained momentum. If the price moves back above the 100-day MA, it indicates a significant level for potential bias changes and risk assessment.
Based on today’s price action on August 11, 2025, the USDCAD pair has shown a significant sign of weakness. The attempt to move above the 100-day moving average at 1.37876 failed, suggesting that sellers are taking control. This rejection at a key technical level indicates that the recent upward momentum has likely stalled.
This price action is supported by fundamentals, as West Texas Intermediate crude oil has shown renewed strength, recently trading above $85 a barrel. A strong oil market is historically beneficial for the commodity-linked Canadian dollar, putting downward pressure on the USDCAD exchange rate. This gives us more confidence that the pair may continue to drift lower.
Opportunities For Derivative Traders
We have also seen recent US economic data from July 2025 that points to a moderation in both inflation and job growth. This has led to speculation that the Federal Reserve may be finished with its rate-hiking cycle for the year. A less aggressive Fed typically weighs on the US dollar, reinforcing the bearish outlook for the pair.
For derivative traders, this provides a clear opportunity to establish short positions or buy puts in the coming weeks. The 100-day moving average now acts as a firm resistance level to trade against, offering a well-defined point to manage risk. As long as the price remains below this 1.37876 level, the path of least resistance appears to be lower.
The initial downside target would be the 38.2% retracement level at 1.37626. A break below that would open the door for a move toward the next support zone near the 100-hour moving average at 1.3754. If selling pressure accelerates, the 50% retracement level would be the subsequent logical target.
We must remain mindful of market history, recalling a similar situation earlier this summer when a breakdown below the 50% retracement quickly reversed. Failed moves are a key technical pattern to watch out for. Therefore, if buyers unexpectedly return and push the price firmly back above the 100-day moving average, it would invalidate the bearish bias.
