Title: USD/CAD Forecast for October 7, 2025: US Dollar Applies Sustained Pressure on Canadian Dollar
Author Credit: Based on the original article by Mahmoud Alkudsi, DailyForex
Overview
On Monday, October 7, 2025, the US dollar extended its momentum against the Canadian dollar, showing sustained strength as the week began. The USD/CAD pair continued to trade higher, maintaining the upward trajectory evident in recent weeks. The bullish bias remains durable amid broader macroeconomic and geopolitical developments, including a strong US economy, high crude oil volatility, and market sentiment regarding interest rates.
This article explores the technical and fundamental dynamics driving the USD/CAD currency pair as of early October 2025. Drawing from original analysis by Mahmoud Alkudsi and incorporating additional insights from various sources, we review the key catalysts supporting the pair’s movements, examine relevant chart patterns, provide trading strategies, and forecast near-term expectations.
Key Fundamentals Influencing USD/CAD
The appreciation of the US dollar relative to the Canadian dollar on October 7 was driven by multiple contributing factors:
1. Stronger US Employment and Economic Data:
– Non-farm payrolls surged in the most recent report, with 295,000 jobs added, exceeding expectations of 170,000.
– The unemployment rate remained steady at 3.8%, underscoring the continued tightness in the US labor market.
– Average hourly earnings rose 0.4% month-over-month, indicating rising wage pressures that may justify extended higher interest rates.
2. Federal Reserve’s Hawkish Tone:
– Fed officials, including Chair Jerome Powell, reiterated the need to keep interest rates elevated to tame lingering inflation.
– Markets are now pricing in at least one more 25 bps rate hike before the end of 2025, with less optimism for cuts in early 2026.
– The monetary divergence between the Federal Reserve and the Bank of Canada makes the greenback more attractive in yield-based trades.
3. Oil Price Weakness:
– Crude oil, a key Canadian export, dropped below $82 per barrel on Monday.
– With weaker oil prices, demand for the Canadian dollar diminishes, given its tight correlation with energy exports.
– Lower prices may also prompt caution from the Bank of Canada when considering further rate hikes.
4. Fall in Risk Appetite:
– Global equity markets stumbled amid increased geopolitical tension in the Middle East and continued concerns about China’s economic slowdown.
– As a result, safe-haven flows favored the US dollar, boosting its strength on Monday.
Technical Analysis: USD/CAD Chart Patterns
As of October 7, the USD/CAD pair trades near the 1.3730 region, continuing a bullish streak that began mid-September. The technical outlook remains in favor of upward continuation, although some near-term consolidation could occur.
Resistance Levels:
– 1.3775: The immediate resistance level tested multiple times in recent sessions.
– 1.3840: A key long-term resistance last seen in late March 2023.
– 1.3890–1.3900: Psychological barrier and major network congestion level.
Support Levels:
– 1.3680: Recently formed intraday support.
– 1.3600: Fib retracement level and round number support.
– 1.3510: 50-day EMA and support range from late September.
Indicators:
– RSI: Trading around 62, suggesting bullish momentum without entering overbought territory.
– MACD: Positive divergence with the signal line suggesting the trend favors buyers.
– Moving Averages:
• 50-day EMA: Sloping upward, offering dynamic support around 1.3510.
• 200-day EMA: Far below at 1.3380, reinforcing the primary uptrend still intact.
– Price Action: Forming higher highs and higher lows, consistent with a sustainable
Read more on USD/CAD trading.