USD/CAD Tests Last Week's Swing High and the 100-Day Moving Average
Key Takeaways
- •Hawkish comments from Fed Chair Warsh lifted the US two-year yield 11.5 basis points to 4.347%, strengthening the dollar and pushing USD/CAD higher.
- •The pair's earlier low held support between the 200-hour (1.38370) and 100-hour (1.38599) moving averages, enabling buyers to break above the weekly high at 1.38970.
- •USD/CAD is now testing the August 18–19 high at 1.39079, with the 100-day moving average at 1.39140 the key bullish/bearish battleground.
- •A sustained move above the 100-day average would target the 50% retracement at 1.39268 and then the swing zone between 1.39480 and 1.39663.
- •A drop back below 1.38970 would shift focus to supports at the 100-hour (1.38599) and 200-hour (1.38370) moving averages.
The USD/CAD has extended higher, supported by a stronger US dollar and a sharp rise in US yields after hawkish comments from Fed Chair Warsh. The US two-year yield is up 11.5 basis points at 4.347%, a move that reflects reduced expectations for near-term Fed easing and has provided a fundamental catalyst for the dollar's advance. That yield-driven dynamic matters directly for this pair: USD/CAD tracks the interest-rate differential between the Federal Reserve and the Bank of Canada closely, so shifts in rate expectations on either side of the border tend to translate into directional moves in the exchange rate.
On the technical side, the day's low stalled between the rising 200-hour moving average at 1.38370 and the 100-hour moving average at 1.38599. Holding that support cluster gave buyers the green light to push the pair higher, and the price subsequently broke above this week's previous high at 1.38970, a move aided by Warsh's speech.
The pair is now extending to fresh highs for the day and testing the August 18 and August 19 high at 1.39079. Just above that level sits the more significant 100-day moving average at 1.39140. Longer-term moving averages like the 100-day are widely watched by traders as a dividing line between bullish and bearish momentum regimes, which is why they often act as battlegrounds where buyers and sellers test control.
That moving average serves as a key barometer for both buyers and sellers. A move above the 100-day moving average—and, importantly, a sustained hold above it—would strengthen the bullish bias and open the door to additional upside momentum. The next targets would come near the 50% retracement at 1.39268, followed by the swing area between 1.39480 and 1.39663.
Conversely, if sellers lean against the 100-day moving average, the weekly high at 1.38970 becomes the first support level. A move back below that level would sap some of the buyers' momentum and shift the focus toward the 100-hour moving average at 1.38599 and the 200-hour moving average at 1.38370.
For now, buyers are making a play. The 100-day moving average at 1.39140 is the next—and most important—test.
