USD/CAD is aiming for a seven-month high of 1.4079, currently trading near 1.4060, with a bullish trend. The pair’s short-term momentum is strong, surpassing the nine-day Exponential Moving Average (EMA).

The 14-day Relative Strength Index is nearing 70, which could indicate further upward movement. If USD/CAD breaks 1.4079 and the psychological level of 1.4100, the next target might be around 1.4210.

Support and Resistance Levels

On the downside, support is at the nine-day EMA of 1.4013 and the psychological level of 1.4000. A fall below these levels could lead to further losses to the 50-day EMA at 1.3933, then to around 1.3920.

The percentage changes show CAD as weakest against the Japanese Yen. Percentage changes between currencies, such as USD/CAD at 0.04%, highlight minor daily shifts.

The table displays the changes, using base currency from the left and quote currency from the top. For instance, CAD’s position against USD shows a 0.04% change, reflecting market dynamics.

Akhtar Faruqui is known for providing comprehensive Forex analyses, focusing on market trends and financial dynamics. Based in New Delhi, India, he delivers in-depth news and analysis to understand market movements better.

Trends in Central Bank Policies

We are seeing a clear upward trend for the US dollar against the Canadian dollar, with the pair approaching a significant seven-month high. The momentum indicates that a break above the 1.4100 level is highly probable in the next few weeks. This move is supported by technical strength, as the Relative Strength Index still has room to rise before indicating an overbought condition.

This market dynamic is heavily influenced by the diverging paths of the central banks, a major theme for us throughout 2025. The latest US inflation data from October 2025 came in at a persistent 3.4%, reinforcing the Federal Reserve’s hawkish stance on keeping interest rates elevated. Meanwhile, the Bank of Canada is facing a softer domestic economy, with Canadian inflation cooling to 2.9% and growing concerns over the housing market.

The Canadian dollar’s weakness is also being compounded by sluggish commodity prices. West Texas Intermediate crude oil, a key Canadian export, has struggled to maintain prices above $85 per barrel amid concerns about global demand. This contrasts with the broad strength of the US dollar, which has been gaining against most other major currencies recently.

For those of us trading derivatives, this suggests a strategy of buying USD/CAD call options could be effective. Targeting strike prices near 1.4100 or 1.4150 would position us to benefit from a continued move towards the 1.4210 resistance level. This approach allows us to capitalize on the expected upward move with a clearly defined risk.

However, we must manage our downside risk by watching the 1.4000 psychological level, which now acts as a key support. A decisive break below this mark could invalidate the short-term bullish view and trigger a sell-off. We saw similar sharp reversals from these levels back in the spring of 2020, reminding us that volatility can increase at these multi-month highs.

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