FX.co ★ USD/CAD

USD/CAD pared its earlier decline on Friday as the US dollar rebounded from a three-week low, though the recovery looks more like a pause than a reversal. The pair had slipped to 1.4013, its weakest level in a month, before stabilising near 1.4000, and the broader tone still favours the Canadian dollar. The loonie has drawn support from elevated crude prices tied to Middle East supply risks, with reports that Washington and Israel are preparing for a potential strike on Iran after the US midterms, pushing oil to a five-week high. Houthi attacks on Saudi Arabia have added to the energy risk premium, and that backdrop tends to benefit commodity-linked currencies like CAD. Global equities remain fragile, with AI-related selling driving demand for government bonds and pulling US Treasury yields lower. The 10-year yield has retreated to roughly 5.03% from a high of 5.36% earlier this month, and the dollar index has eased back toward 101.78 after approaching 103.00 the previous week. That softer yield backdrop has narrowed the dollar’s advantage and helped CAD hold its ground. Still, the downside for USD/CAD appears limited. The rate differential between the US and Canada remains wide, with Canada’s 10-year yield near 3.81%, and the Fed is widely expected to hold rates steady at its upcoming meeting while markets price in roughly an 89% chance of a December hike, according to the CME FedWatch tool. On the Canadian side, the Bank of Canada meets on October 28, with September CPI rising to 3.1% year-on-year, a four-month high driven mainly by gasoline. That keeps a hike on the table, but the wider US-Canada spread continues to cap meaningful CAD appreciation. For now, the USD/CAD forecast points to a market caught between a softer dollar and a resilient loonie, with the yield gap acting as a floor under the pair.

USD/CAD is trading near 1.4000, and the moving averages are stacked entirely above the market. On the H1 chart, the 50-period SMA sits at 1.4037 and the 200-period SMA at 1.4137. On the H4 chart, the 50-period SMA is at 1.4132 and the 200-period SMA at 1.4090. Price is below all four, which confirms a bearish short- and medium-term bias. These SMAs should be read as dynamic resistance rather than static barriers: the H1 50-period SMA at 1.4037 is the first dynamic hurdle, while the H4 200-period SMA at 1.4090 and the clustered H4 50-period and H1 200-period averages around 1.4132–1.4137 form a heavier dynamic ceiling. Because no SMA support sits beneath the current price, the downside is defined by horizontal levels instead. Horizontal support is located at 1.4000, a psychological round number, followed by 1.3980 and then 1.3950, with 1.3920 and 1.3900 marking deeper demand zones. Horizontal resistance begins at 1.4037, then 1.4090, followed by the 1.4132–1.4137 confluence and 1.4180 above that. These horizontal levels are separate from the SMAs; they are fixed price zones where buyers and sellers have previously reacted, whereas the moving averages shift with each session. If buyers hold above 1.4000 and push through 1.4037, a retest of 1.4090 becomes plausible. If 1.4000 gives way, the pair could extend toward 1.3980 and 1.3950. The technical bias remains bearish while price stays below the SMA stack, but a daily close above 1.4090 would be the first meaningful sign that the downtrend is losing momentum.