The USD/CAD Continues Bullish Momentum: Technical Analysis and Market Outlook
Original Source Credit: Economies.com, Article by Economies Team (Published October 1, 2025)
The USD/CAD forex pair has recently extended its bullish momentum, continuing an upward trend that has been building for several sessions. Investor sentiment has shifted in response to global economic data, central bank policies, and commodity market movements, particularly those tied to crude oil, which directly impacts the Canadian dollar.
In this article, we dissect the reasons behind the rise of the USD/CAD currency pair, analyze its technical structure, and look at macroeconomic factors influencing price action.
Overview of Recent Activity
The USD/CAD pair has been showing strong upward movement, breaking through key resistance zones and staying above its short-term and long-term moving averages. This confirms the continuation of its bullish trend and signals potential for further gains.
Key Highlights:
– USD/CAD is trading above support at 1.3600 and recently tested highs near 1.3670
– Bullish momentum has been sustained by strong U.S. economic data and Federal Reserve hawkishness
– Weakness in oil prices put pressure on the Canadian dollar
– Technical indicators support continuation toward next resistance at 1.3740 and possibly 1.3800
Technical Analysis
1. Price Structure:
The pair has effectively bounced off the 20-day and 50-day moving averages. At present, daily candlestick patterns suggest ongoing bullish sentiment, with higher highs and higher lows forming on the chart.
2. Moving Averages:
– The 20-day EMA is acting as dynamic support, currently around 1.3570
– The 50-day SMA is located around 1.3510, reinforcing medium-term support
As long as the price remains above these averages, trend-following systems are likely to support buying activity on dips. A sustained break below 1.3500 would shift short-term sentiment to neutral or slightly bearish.
3. Resistance Levels Ahead:
– Immediate Resistance: 1.3685 (recent session high)
– Next Target: 1.3740 (previous swing high)
– Psychological Resistance: 1.3800
Should bullish momentum persist and the U.S. dollar continue strengthening, the pair could aim toward these higher resistance levels.
4. Support Levels:
– 1.3600 (immediate support)
– 1.3540 (weekly low)
– 1.3500 (key horizontal support and the 50-day SMA)
A breakdown below these levels could stall the current bullish movement and potentially trigger corrective pullbacks.
5. RSI and Momentum Indicators:
The Relative Strength Index (RSI) has been registering above the 60 level, suggesting room for additional upside before reaching overbought territory. Meanwhile, MACD (Moving Average Convergence Divergence) remains above the signal line, which confirms bullish pressure.
Fundamental Drivers Supporting USD Strength
The recent surge in USD/CAD is not merely a technical development. There are key macroeconomic and geopolitical fundamentals that continue to support the U.S. dollar.
1. Hawkish Fed Stance:
The U.S. Federal Reserve has explicitly stated its willingness to keep interest rates higher for longer in order to bring inflation back to its 2% target. Several Fed speeches and economic projections have signaled that rate cuts are not imminent and may not begin until mid-to-late 2026, depending on inflationary dynamics.
Impact:
– Higher U.S. bond yields attract foreign capital to dollar-denominated assets
– Increases demand for the U.S. dollar, particularly in paired currencies with lower-yielding central banks like the Bank of Canada
2. Strong U.S. Economic Data:
Recent economic indicators from the United States continue to show resilience:
– U.S. GDP grew at an annualized rate of 2.4% in Q3 2025
– Unemployment remains historically low at
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