The USDCAD is showing a more bullish bias, with crucial resistance levels between 1.38279 and 1.3833 marked by the 100-day moving average and the 61.8% retracement from May’s downturn. The pair maintains its position above the June high of 1.37969, which is essential for sustaining an upward trend.
Certain resistance levels at 1.38279 and 1.38335 might attract short-term sellers looking to secure profits. Surpassing these levels would boost buyer confidence for a further move upward. Currently, the USDCAD is down by 560 pips or 3.968% year-to-date, which benefits the Canadian inflation landscape.
Usdcad Potential Buy Signal
Despite this decline, the possibility of a shift to “buy US dollar mode” exists. However, breaching the 100-day moving average remains central for a stronger bullish outlook. Historically, USDCAD traded within a range from November after a rise from September 2024, with spikes driven by tariff anxieties.
As tariff concerns diminished, the pair’s movements shifted outside this range, eventually leading to a drop to the 2025 low. The current correction, while still moderate, approaches a significant potential turning point for the currency pair.
The USDCAD is holding above the 1.37969 level, which was the high back in June. Staying above this price is critical for the uptrend to continue in the coming days. For traders, this level acts as a short-term line in the sand for the current bullish momentum.
Potential Resistance Challenges
We are now approaching a major resistance zone between 1.3828 and 1.3833. This area, which includes the 100-day moving average, is a logical place for some profit-taking. The recent US jobs report showing 285,000 new positions added this month strengthens the case for a stronger dollar, making a break of this resistance possible.
If the pair decisively moves above 1.3833, traders might consider buying call options to capture further upside potential. This would signal increased confidence from buyers and could open the door for a larger move higher. Such a breakout would suggest the recent “buy US dollar” sentiment is gathering serious steam.
On the Canadian side, the fundamental picture also supports a higher USDCAD. The latest inflation reading for Canada came in at 2.7%, slightly below expectations, which reduces pressure on the Bank of Canada to be aggressive. A recent dip in WTI crude oil prices to around $81 a barrel also adds a headwind for the loonie.
However, if sellers successfully defend the 1.3833 resistance level, it could be an opportunity for more cautious strategies. Traders might look at buying put options or establishing bear call spreads, betting on a rejection back toward the 1.3796 support. This scenario becomes more likely if we see a sudden recovery in oil prices or surprisingly strong Canadian economic data.
Even with this recent rally, we have to remember that USDCAD is still down nearly 4% for the year 2025. We recall how the market was mostly range-bound late in 2024, with tariff anxiety causing temporary spikes before fading. The current upward move is still just a correction within that larger downtrend.
