Title: USD/CAD Attempts Recovery Amidst Lingering Negative Pressures
Source: Adapted and expanded from the original analysis by Economies.com, dated October 31, 2025
Overview
The USD/CAD currency pair has been navigating a complex landscape of economic indicators, technical chart patterns, and policy speculation. As of late October 2025, the pair is showing signs it may be attempting to shake off some of the bearish pressures that have weighed heavily on it in previous sessions. However, bullish momentum remains tentative, with traders watching key support and resistance levels and macroeconomic triggers to determine the next direction.
This article will delve into the current setup facing the USD/CAD pair, technical and fundamental analysis, market sentiment, and possible scenarios depending on different price actions. It synthesizes the original analysis by Economies.com while expanding with additional insights and updated context.
Current Price Activity and Technical Setup
USD/CAD started the week with a slight upward inclination, with bulls seeking to reclaim lost territory after recent declines. In its October 31, 2025 analysis, Economies.com indicated that the pair is aiming to counteract the negative momentum observed in prior sessions by moving toward key resistance thresholds.
Key technical indicators supporting a possible reversal include:
– Price currently testing medium-term descending trendlines.
– A rebound from the 1.3600 support level, showing resilience after a previous downtrend.
– Stochastic oscillator beginning to exit oversold territory, indicating possible renewed bullish momentum.
– Price action attempting to hold above the 50-day Simple Moving Average (SMA), a commonly watched technical benchmark.
Despite this recovery effort, several warning signs remain:
– USD/CAD remains below the 200-day SMA, a longer-term barometer of trend direction.
– Recent lower highs suggest that bearish pressure is still present.
– MACD indicator shows some bullish divergence, but remains largely neutral to bearish.
Current Price Levels:
– Support: 1.3600, followed by 1.3525
– Resistance: 1.3680, followed by 1.3750
Breaking above 1.3680 could pave the way for a challenge of the 1.3750 level, potentially confirming a short-term bullish reversal. However, slipping below 1.3600 would strengthen bearish momentum, targeting 1.3525 and possibly lower zones.
Fundamental Drivers Supporting USD/CAD Activity
Several macroeconomic factors are contributing to the oscillations seen in USD/CAD. These include U.S. monetary policy, Canadian economic data, oil price movements, and broader risk sentiment.
1. U.S. Monetary Policy Outlook
– The U.S. Federal Reserve has recently signaled cautious optimism that inflation is moderating, though it remains above the 2% target.
– Federal Reserve Chair Jerome Powell hinted that further rate hikes might not be necessary if inflation continues its downward path.
– Fed funds futures indicate growing market confidence that rate cuts may begin in the first half of 2026.
The possibility of no further hikes or even an early pivot to easing puts downward pressure on the U.S. dollar.
2. Canadian Economic Conditions
– Canadian inflation data for September 2025 showed a mild slowdown, with CPI rising 3.2% year-on-year, versus 3.4% the previous month.
– The Bank of Canada (BoC) has maintained its policy rate at 5.00%, citing global uncertainty and the need for more data.
– GDP figures indicated a modest 0.3% quarterly growth, bolstered moderately by consumer spending and real estate.
While inflation remains above the BoC’s comfort zone, growth concerns are prompting the central bank to hold off on further rate increases, contributing to some Canadian dollar softness.
3. Oil Prices and Impact on CAD
As a commodity-linked currency, the Canadian dollar is highly sensitive to crude oil prices:
– West Texas Intermediate (WTI) crude has been range-bound near $83 per
Read more on USD/CAD trading.