Insights 
VT 
USDCAD has hit new lows in 2025 as the Canadian dollar gains strength from rising oil prices, while demand for the U.S. dollar decreases. The exchange rate fell to 1.3574, marking its lowest point since October 2024.
The currency pair dropped below a key technical level, between 1.36038 and 1.36337, which includes last week’s low. Staying below this range maintains downward momentum, enhancing short-term selling pressure. If this trend continues, the rate could approach the 1.3500 level, with September’s low at 1.34198.
Current Market Conditions
Current market conditions suggest further downside as the USDCAD trades in a range seen between August and October 2024.
As the Canadian dollar continues its upward trajectory, bolstered by stronger oil prices, we’ve seen sustained downward movement in the USD/CAD pair—pressing into levels not witnessed since the autumn of last year. The pair slipping under prior support in the 1.36038–1.36337 area signals that seller conviction remains intact, especially with the daily closes staying comfortably below that zone. This decline implies that attempts to rally have been met with resistance, not enthusiasm, reflecting broader shifts in capital flows and regional expectations.
Now that USDCAD lingers in territory last traded between late summer and mid-autumn of 2024, we’re essentially circling historically sensitive price zones. That same period saw consolidation ahead of a late-year rebound, so the proximity to the 1.3500 threshold—and just below that, 1.34198 from last September—deserves attention. Breaching those zones could attract further downward momentum. Not in the sense of a freefall, necessarily, but enough to re-price derivative contracts based on continued weakness.
Market Momentum and Expectations
In our view, short bias remains valid as long as key levels mentioned earlier are not reclaimed with conviction. The market has started to behave in a way that suggests a recalibration of expectations around monetary policy differentials, especially considering how oil-linked currencies respond to prolonged inflation signals.
Let’s not forget that support levels don’t hold because they ought to—they hold because positioning respects them. And once one of those breaks, flows can become one-sided fairly quickly. Until there’s a notable reaction near the previously tested lows, we assume further weakness is more probable than a reversal.
Volume profiles and commitment from institutional participants also lean towards continuation. There’s less hesitation in recent sessions, indicating more traders are entering with a sense of directional clarity. Longer-term option structures appear skewed towards additional downside bets, perhaps hinting at how positioning is being laid in advance of upcoming economic prints. So, as we look to the next few weeks, it would be reasonable to keep the focus on how price reacts around 1.3500 and whether flows deepen beneath that.
Also worth noting: interbank forward pricing has adjusted to reflect a new balance of expectations. That tells us that even across tenors, the risk premium is no longer tilted in favour of North America’s southern neighbour.
What we’re currently seeing is not merely drift, but an acknowledgment of momentum, aided by a more stable oil market and narrowing yields. This tilt creates conditions less favourable for sudden reversals. For anyone watching the hourly and daily trends, it’s the lack of upward follow-through after minor recoveries that stands out the most. Repeated rejection near resistance levels adds to the narrative of a gradually softening greenback in this pairing.
With that, the coming days may offer more clarity as liquidity returns after the latest long weekend in North America, possibly adding volume to pending orders. Until then, it’s the reaction at key technical levels—not headlines—that will shape early Q2 positioning.
