Insights 
VT 
USDCAD is experiencing a continuous upward trend, gaining over six consecutive days. It has risen from a low of 1.3575 on 23 July to a high of 1.3853, marking a gain of approximately 278 pips.
The pair recently surpassed a two-month consolidation range, moving past the June high of 1.37955 and crossing above the 100-day moving average at 1.38233. It briefly dropped to a session low of 1.3813 but quickly recovered, maintaining its position above the 100-day moving average.
North American Session Analysis
During the North American session, a retest led to a dip at 1.38268, marginally above the moving average, indicating a defended support level. Remaining above 1.38233 suggests continued bullish control, providing confidence to buyers.
Yesterday’s close at 1.38292 has formed a support zone. If USDCAD falls below this and the 100-day moving average, the focus will revert to the old range ceiling and the June high at 1.37955. Dropping back into the prior consolidation range could challenge the breakout’s sustainability.
We are seeing a significant bullish breakout in USDCAD, which has climbed for six straight days. The pair is holding firmly above the 100-day moving average at 1.38233, a level that is now acting as a critical floor. As long as the price stays above this mark, we expect bullish momentum to build in the coming weeks.
Upcoming Economic Indicators
This strength is being fueled by diverging economic signals. Recent data showed Canadian retail sales for June slowing more than anticipated, raising concerns about the domestic economy. Simultaneously, WTI crude oil prices have fallen over 4% in the last week, dropping below $80 per barrel, which weighs heavily on the commodity-linked Canadian dollar.
Looking ahead, all eyes are on the upcoming US Non-Farm Payrolls report for July, scheduled for release next week. Market chatter suggests a strong number is anticipated, which would reinforce the Federal Reserve’s case for maintaining its current policy stance and further boost the US dollar. This contrasts with growing speculation that the Bank of Canada may need to consider easing if its own economic data continues to soften.
For traders anticipating further gains, buying call options is a direct way to participate in the upside. Given the recent sharp move, implied volatility has likely increased, so using bull call spreads could be a more cost-effective strategy to target a move towards the 1.4000 level while defining risk. These positions would benefit if the pair continues its upward trajectory following the recent breakout.
To manage risk, we must watch the 1.38233 level closely. A sustained break below this moving average and the former resistance at 1.37955 would signal that this breakout has failed. In that scenario, purchasing put options could serve as an effective hedge against long positions or as a standalone bet on the pair returning to its previous trading range.
Historically, we have seen similar breakouts in USDCAD, like the one in late 2024, often pause to consolidate gains before continuing higher. Traders should therefore not be overly concerned by minor pullbacks as long as the key support levels hold. This pattern suggests patience might be required before the next major leg of the trend unfolds.
