Insights 
VT 
The USDCAD pair experienced a drop due to U.S. dollar weakness but found support at a familiar zone. The pair tested the 200-bar moving average on the 4-hour chart, near 1.37844, before bouncing back. Previously, after the U.S. jobs report, the price dipped below this level but regained momentum near the 100-day moving average at 1.37626.
Key Moving Averages
Following the successful test of this support, the USDCAD rebounded above the 100-bar moving average on the 4-hour chart at 1.3814. These levels—the 100-day MA (1.37626), 200-bar MA on the 4-hour (1.37844), and 100-bar MA on the 4-hour (1.3814)—are key for directing the trend in the upcoming trading week.
Keeping above this cluster indicates a more bullish outlook for the pair. If the price falls below the 100-day moving average at 1.37626, there could be potential for further declines. Currently, although there were declines from Friday’s close, the support levels have been maintained, sustaining buyer interest and offering more control.
We are seeing the USDCAD pair finding solid ground at a critical support zone formed by several key moving averages. The price has bounced off the 1.3784 level and is now back above 1.3814. This tells us buyers are defending this area, keeping the immediate outlook tilted more to the upside for now.
The broader market context supports this technical picture, especially with the US August 2025 inflation (CPI) data due next week. Current market consensus is forecasting a slight uptick to 3.2% year-over-year, which could pressure the Federal Reserve to maintain its hawkish stance. This uncertainty about future rate hikes is a key reason why the US dollar is finding support on dips.
On the Canadian side, the recent drop in WTI crude oil prices from over $95 in July 2025 to around $88 is weighing on the loonie. The Bank of Canada also signaled a pause at its last meeting, creating a policy divergence with the Fed. This fundamental weakness in the Canadian dollar reinforces the case for a stronger USDCAD.
Opportunities and Risks for Traders
For derivative traders, this bounce from support presents a clear opportunity to position for a move higher. We believe buying near-term call options with a strike price around 1.3850 or 1.3900 for late September 2025 expiry is a viable strategy. This allows for capitalizing on a potential upward drift as long as the key 1.3762 support level holds firm.
However, we must also plan for the opposite scenario. A decisive break below the 100-day moving average at 1.3762 would signal that the support has failed and the sellers are back in control. In that event, traders should be ready to switch gears by buying put options to target lower levels.
This type of price action is familiar, reminding us of the range-bound trading we saw throughout much of 2023. During that time, the pair was similarly caught between shifting central bank expectations and volatile energy markets. The current setup suggests a similar dynamic is in play, making these technical levels extremely important to watch in the coming weeks.
