The USDCAD faced resistance at its 100-day moving average at 1.37738 and the 100-bar moving average on the 4-hour chart at 1.37516. In early trading, buyers managed to push the pair higher after initial pressure from sellers.
Breakout Beyond Key Levels
Stronger-than-expected PPI data helped the USDCAD break above the 100-day moving average, leading to a rise beyond this week’s prior high of 1.3805, reaching 1.3817. The 100-day moving average now acts as a key point for potential upside movement.
If the USDCAD sustains above current levels, it may target 1.3860, which aligns with the May 29 high, and further aim for 1.38789, the high from two weeks ago. Breaking above these points would focus attention on reaching the 38.2% retracement at 1.39229.
Failure to maintain above these resistance levels may keep the market in a sideways range. This makes current levels important for assessing future price direction.
Trading Strategy and Market Dynamics
Given the recent breakout above key moving averages, we see a clear bullish bias for USDCAD. The push past the 100-day moving average at 1.3773, fueled by strong US economic signals, has shifted the dynamic. This move was further validated by the July 2025 US CPI data released last week, which came in at 3.4%, slightly above expectations and keeping pressure on the Federal Reserve.
For traders, this means using the 100-day moving average as a new support level for initiating bullish derivative strategies. We view any dip towards the 1.3775 area as a potential opportunity to buy call options or enter long futures positions. This strategy is reinforced by recent soft data out of Canada, where June 2025 retail sales unexpectedly contracted by 0.5%, highlighting a growing policy divergence with the US.
Looking back, this setup is reminiscent of the market action in late 2024, when Fed hawkishness contrasted with a more cautious Bank of Canada, leading to a sustained rally in the pair. The immediate upside targets we are watching are 1.3860 and then 1.3879. A decisive break above these levels could trigger further buying and open up a path toward the 38.2% retracement level at 1.39229.
Therefore, our strategy in the coming weeks involves positioning for further upside while managing risk below the 1.3773 level. Protective puts could be considered if the price falls back below this critical support, as that would invalidate the current bullish momentum. Until then, the path of least resistance appears to be higher as long as the pair remains above that key technical line.
