The Canadian dollar is remaining stable against the US dollar as it enters Thursday’s North American session, yet it is under pressure due to lower oil prices linked to prospects of a US/Iran agreement. The currency faces challenges from both reduced oil prices and broader yield spreads, which are impacting its performance.

The fair value estimate for USD/CAD has risen and stands at 1.3892. Domestic factors affecting the CAD include the release of housing starts, manufacturing sales, and existing home sales data. However, overall market trends, and significant events like Powell and US data releases, may have a larger influence.

Usd Cad Resistance Levels

The USD/CAD reached notable resistance levels above 1.4000 earlier in the week. Despite this, the currency pair’s double top formation and the resistance encountered could point to a renewed push beyond 1.4000. The midpoint of the September to February range at approximately 1.4100 remains a key level, with near-term support defined at around 1.3920.

It is crucial to remember that the information contains forward-looking statements with inherent risks. Thorough research is advised before any financial decisions, acknowledging the potential risks and losses involved in market investments.

With the Canadian dollar tethered near familiar ranges, it remains vulnerable to downside pressures stemming from broader external forces. The link between commodity-driven currencies and oil remains robust, and as crude benchmarks soften on improving geopolitical dialogues, the pressure on CAD becomes more pronounced. Lower energy prices typically sap momentum from the loonie, and this effect isn’t being offset by countervailing domestic data so far.

The recent bump in the fair value estimate for USD/CAD to 1.3892 adds weight to bullish positions favouring continued strength in the greenback. While short-term data prints from Canada—housing starts, manufacturing trends, and real-estate figures—do set the tone for internal market sentiment, they’re unlikely to counterbalance the deeper macro drivers influencing currency behaviour at present.

Watch Key Support Levels

Resistance tested around 1.4000 earlier in the week hasn’t resulted in any decisive reversal, and traders should take note of the double top pattern that emerged. While typically a trend-reversal signal, this structure has not been accompanied by follow-through selling or deterioration in USD momentum. Instead, the price action continues to consolidate just below those levels, keeping the potential for a re-test alive—particularly with the 1.4100 zone standing out as a decisive technical marker. That midpoint of the past multi-month range is drawing speculative interest, as it may act as a magnet for price action in case of further US strength.

On the other side of the range, support around 1.3920 defines the first layer of defence for CAD bulls, with any clean break beneath it likely weakening momentum and raising the probability of a broader retracement. Watching this zone closely is prudent, especially ahead of upcoming economic updates from Washington. Market reaction to Powell’s commentary and key data releases there have the capacity to sharply alter sentiment.

Expect faster intraday flows and more aggressive positioning around these levels as macro volatility increases. We’re keeping an eye on short-term correlation breaks, particularly between USD/CAD and WTI pricing. When typical relationships start to diverge, risk-adjusted positioning must be adapted swiftly.

As with all analysis involving predictive elements, one must approach with measured caution. The data informs our strategies, but the price action affirms them. Maintaining a process driven by discipline, instead of reacting to headlines, is what will define performance over the next few sessions.

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