The USDCAD faced downward pressure earlier, breaking below a swing area between 1.38078 and 1.38499. This zone has played roles as support and resistance since late 2024 and over the last two weeks.
Today’s low hit 1.37808, the lowest since October 17, 2024. Nonetheless, the downside momentum stopped, with the pair rebounding back into the swing zone.
Potential Movement Above Swing Area
The near-term focus is whether the price can rise above the swing area’s top boundary at 1.38499. Surpassing this level would be a minor success for buyers, though further challenges await.
Key targets to surpass next include the 100-hour moving average at 1.38692. Breaking this would increase short-term upward momentum. The 200-hour moving average at 1.39122 is more critical; breaking past it would indicate a stronger shift toward the upside.
Currently, the downward trend persists, but buyers are attempting to gain ground. The 1.38499 level is pivotal; remaining below suggests seller dominance, while breaking above would support recovery efforts.
We’ve seen the US dollar falter against the Canadian dollar after breaching that familiar support-resistance zone, the kind that’s been steering short-term positioning decisions since late last year. The drop beneath that band—between 1.38078 and 1.38499—opened the door to more liquidations, and the pair extended lower to test what became a multi-week low. One might have expected more follow-through once 1.37808 gave way, particularly given the momentum that had been building. But there was hesitation.
That hesitation marked a real turning point, at least for now. Price didn’t stick at the lows. Instead, it clawed its way back—nudging past the lower boundary of that familiar range. What we’ve got is a market still leaning to the downside, though far less committed than it was earlier in the week.
Resistance And Decision Points
The level at 1.38499 matters because it serves as a decision-point for the very short term. Staying under it means sellers have the upper hand. We’d expect more frequent tests of support levels, or at the very least, a refusal by the market to price in much recovery. But if we do climb and hold above that upper boundary, the dynamic will shift. Not dramatically—nothing here suggests a full reversal—but it becomes a lot harder to bet against a bounce at that stage.
If there’s a path towards a less one-sided trend, we’ll most likely see the pair push towards the 100-hour average, resting at 1.38692. That’s where you start to see some traders trimming shorts. It’s not a big barrier, but it will point to more comfort with holding over the weekend, especially if we close near it.
Continue further, and you hit more resistance at 1.39122, which aligns with the heavier-weighted 200-hour average. That’s the part of the chart that day traders tend to watch closely, and the difference in volume as we approach that level tends to reflect some split opinion.
In this sort of scenario, you want to be sizing trade conviction accordingly. It’s not about piling onto a theme, but scaling in cleanly only when those levels break—clearly and with momentum behind them. We’ve already had a false start at the bottom of the range, so scepticism is understandable. Still, price has a tendency to react well when those key moving averages shift from overhead resistance to intraday support.
Until one side gives way definitively, expect shorter-term decision making to dominate. We’re approaching a market phase where timing counts more than direction, at least for now.
