Insights 
VT 
Short-Term Outlook For USD/CAD
Earlier, USD/CAD reached a seven-month high of 1.4120 during Asian hours. Future gains could reach the upper boundary of the ascending channel around 1.4220.
On the decline, primary support is at the psychological level of 1.4100 and the nine-day EMA of 1.4038. Breaking below this could weaken the short-term momentum, leading USD/CAD to test the 50-day EMA at 1.3941 and the ascending channel’s lower boundary around 1.3930.
The Canadian Dollar (CAD) showed a decline against several major currencies. It was notably weaker against the British Pound.
Current Economic Factors Impacting The USD/CAD
Given the strong upward momentum in USD/CAD, we see the pair continues to favor bulls. The immediate strategy is to ride this trend, possibly by acquiring call options targeting the 1.4220 resistance level. This level represents the upper boundary of the ascending channel and is a logical next target.
This strength in the US dollar is not surprising, as it is supported by fundamental economic data. Recent figures from late October 2025 showed US Core PCE inflation remaining stubbornly above the Federal Reserve’s target, reinforcing market beliefs that interest rates will remain elevated well into 2026. As of today, derivatives markets are pricing in less than a 20% chance of a Fed rate cut before the second quarter of next year.
On the other side of the pair, the Canadian dollar is facing its own headwinds, making it weaker. WTI crude oil prices, a key driver for the CAD, recently broke below the critical $80 per barrel support level amid renewed concerns over slowing global demand. This, combined with the Bank of Canada’s more cautious tone in its late October 2025 statement, has put sustained pressure on the loonie.
