The USD/CAD Is Attempting to Gain Bullish Momentum – In-depth Analysis
Original article by Economies.com (published on October 13, 2025)
The USD/CAD currency pair is showing signs of building bullish momentum as market participants eye macroeconomic indicators and technical formations for near-term directional cues. After a period of consolidation, the pair has attempted to shift out of a neutral zone, underpinned by both fundamental catalysts and renewed investor sentiment toward the strength of the U.S. dollar.
Traders are watching closely as oil price fluctuations, central bank policies, and upcoming economic data releases out of both the United States and Canada will all impact the trajectory of the pair. Here, we provide an extended and comprehensive look at the current market dynamics influencing USD/CAD, blending the original analysis with broader market context to form a clearer outlook.
Technical Outlook for USD/CAD
The USD/CAD pair has been progressing through a critical technical phase. The original report by Economies.com highlighted a bullish attempt as the pair moved above the 1.3675 resistance level. This breakout suggests that further upside could be on the horizon if buyers remain in control.
Key technical highlights include:
– The pair breached the 50-day Exponential Moving Average (EMA), which typically signifies a change in short-to-mid term trend direction.
– A key resistance level turned into support at approximately 1.3675, reinforcing a bullish breakout pattern.
– The Relative Strength Index (RSI) climbed above the 50-level, underscoring growing upward momentum with room for further movement before reaching overbought territory.
The analysis underscores the importance of sustaining the move above 1.3675 for additional bullish confirmation. Should this level continue to hold, the next targets are projected at:
– 1.3765: A near-term resistance level that capped gains in previous attempts, serving as an interim target.
– 1.3850: A more substantial resistance and psychological level, potentially acting as a medium-term objective for buyers.
Daily Moving Averages:
– 20-day EMA: approximately 1.3620, acting as a support
– 50-day EMA: around 1.3650, recently broken
– 100-day EMA: located near 1.3560, showing bullish divergence
Volume indicators have also shown increased participation on recent up days, adding strength to the bullish sentiment. A continuation depends on broader market risk sentiment and upcoming catalysts.
Fundamental Factors Driving USD/CAD
Several macroeconomic variables are contributing to current price action in the USD/CAD pair. Understanding these drivers can help predict whether the bullish momentum will continue or face resistance.
1. U.S. Economic Resilience
The U.S. dollar has been bolstered by a series of positive economic indicators:
– Consumer Price Index (CPI) inflation remains elevated, giving the Federal Reserve reason to maintain a hawkish tone.
– Labor market data continues to defy expectations, with non-farm payrolls in recent months surprising to the upside.
– The Federal Reserve’s September statement conveyed that interest rates may stay higher for longer if inflation pressures persist.
In turn, these factors have led market participants to favor the U.S. dollar relative to its peers, including the Canadian dollar, which tends to weaken in contrast during strong interest rate divergence.
2. Canadian Economic Slowdown
Canada’s economy has shown signs of deceleration, which contrast sharply with the relative strength of the U.S. economy.
– The Bank of Canada (BoC) opted to hold interest rates steady during its most recent meeting, citing weaker GDP growth and slowing consumer demand.
– Canadian GDP grew by just 0.2% in the latest quarterly figure, below expectations and reflecting a tepid domestic environment.
– Unemployment in Canada remains elevated compared to year-ago levels, and wage growth has stalled, dampening the prospects for future rate hikes.
Due to these factors, the divergence in monetary policy between the Fed and
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