Insights 
VT 
The Canadian Dollar (CAD) is stable against the US Dollar (USD), showing better performance than most G10 currencies. Despite fiscal announcements in Canada, market reactions have been muted, as Prime Minister Carney shifted the federal budget to autumn and altered definitions for capital expenditure.
Currency Movements and Market Insights
US-Canada yield spreads remain stable and neutral. An upcoming release of trade data anticipates a widened deficit for August, while the Bank of Canada’s risk is linked to SDG Rogers’ upcoming speech. The USD/CAD is estimated slightly higher with early signs of exhaustion, facing resistance at the 200-day moving average and a potential range between 1.3920 and 1.3980.
Among other currency movements, the EUR/USD is steady near 1.1650, and GBP/USD has reversed recent losses. Gold continues to climb, nearing $4,000 per troy ounce. Bitcoin is stable around $124,000 after reaching a high. Japan is experiencing leadership changes, affecting policy direction.
The FXStreet Insights Team compiles market observations, including insights from analysts. They clarify that investing involves substantial risk, and the content should not be construed as personalised advice. The information is not guaranteed for accuracy or completeness.
As of today, October 7th, 2025, the USD/CAD pair seems to be losing steam, finding it difficult to push past the mid-1.39s. With our fair value model pointing towards 1.3713, the current price looks stretched to the upside. This suggests the path of least resistance could soon be lower for the pair.
We see this as an opportunity for traders to consider selling upside volatility, especially with the flattening RSI indicator showing a loss of momentum. Strategies like selling call spreads with strikes above the key 1.40 psychological level could be effective. This area has proven to be significant resistance, as it aligns with the 200-day moving average.
Trade Data and Market Strategy
This morning’s international trade data for August confirmed a wider deficit of C$2.5 billion, slightly worse than the C$2.1 billion that was expected. While this initially weakens the Canadian dollar, its strong link to a resilient US economy, which just posted a solid 215,000 jobs number for September, is providing a floor. This conflicting data reinforces the idea of a range-bound market for now.
Looking back, the market struggled at these same levels in the spring of 2025 before pulling back, suggesting this is a heavy selling zone. The main near-term risk to this view is the Bank of Canada speech on Thursday. We expect SDG Rogers to maintain a cautious tone, similar to the bank’s last statement which held the policy rate at 3.5% while citing global uncertainty.
While we are cautious on the CAD versus the US dollar, its lower volatility profile makes it attractive against other currencies. Given the ongoing economic uncertainty in France and Japan, being long CAD against the Euro or Yen may offer a more stable trade. This relative outperformance on the crosses highlights the CAD’s appeal in a risk-averse environment.
