USDCAD rises modestly as pair tests last week’s highs
Key Takeaways
- •USDCAD briefly fell below its 100-hour moving average before finding support near the 200-hour moving average at 1.4064.
- •The pair rebounded to 1.4112, leaving it just below last week’s high at 1.41166.
- •A sustained move above 1.41166 would shift focus to resistance between 1.4130 and 1.41488.
- •A modest recovery in U.S. Treasury yields helped the U.S. dollar stabilize and supported USDCAD.
- •Lower oil prices and U.S.-Canada trade tension could also be pressuring the Canadian dollar.
USDCAD is modestly higher on the day after sellers failed to extend the downside following an early break lower. The pair opened on the defensive and slipped below its rising 100-hour moving average, currently at 1.40874, but bearish momentum quickly stalled ahead of the 200-hour moving average at 1.4064. The decline reached a low of 1.4071, just above that key support, before buyers stepped back in and pushed the pair higher.
That rebound has lifted USDCAD to 1.4112, leaving the pair just 4 pips below last week’s high at 1.41166. The level is technically significant because it also matches the July 10 swing low, meaning a former support area has now turned into resistance. If buyers want to strengthen the bullish case, they will need to break and hold above 1.41166.
A move above that level would shift attention to the next resistance zone between 1.4130 and 1.41488. That area served as an important floor through much of June and early July before giving way in the sharp July 14 downside break. Former support often becomes resistance, making that zone the next key hurdle for buyers.
The intraday recovery has been supported by a modest rebound in U.S. Treasury yields during the North American session. After falling more sharply earlier in the day, the 2-year Treasury yield is now down just 0.8 basis points at 4.322%, while the 10-year yield has trimmed its losses to 2.8 basis points and is trading at 4.6507%. The stabilization in yields has helped the U.S. dollar recover broadly, providing an additional tailwind for USDCAD.
For traders, the setup keeps the focus on whether the pair can sustain a move back above last week’s high rather than simply extend the rebound. Below that threshold, the recent pullback still looks like a test of support and resistance levels that have been active throughout July, which may keep intraday flows sensitive to shifts in yields and broader dollar sentiment.
Lower oil prices and trade tension between the U.S. and Canada could also be factors weakening the Canadian dollar versus the U.S. dollar, which would support a higher USDCAD.