Canadian Dollar Analysis: USD/CAD Tests 1-Year Highs After Strong US GDP
USD/CAD Key Points
- Another run of strong US data boosted the US dollar, while the Canadian dollar is struggling amidst falling oil prices.
- USD/CAD is testing 1-year highs in the mid-1.38800s.
- A bullish breakout here could expose the 2.5-year high at 1.3975 next.
USD/CAD Fundamental Analysis
It was another day, another run of strong US data yesterday.
Yesterday morning’s US economic reports were almost unanimously stronger than anticipated, highlighted by 4.9% q/q annualized growth in Q3 GDP, an unexpected 0.5% m/m rise in Durable Goods Orders, and a 1.1% m/m uptick in Pending Home Sales.
Source: StoneX
Not surprisingly given the strong data, the US dollar was the strongest major currency on the day. Meanwhile, the Canadian dollar saw little in the way of economic releases, but another round of selling in oil, Canada’s most important export, pushed the loonie to the bottom of the relative strength tables.
Traders are increasingly skeptical that we’ll see another interest rate hike out of the Federal Reserve this cycle, but they’ve essentially priced out any more increases from the Bank of Canada entirely; Whether this flicker of hope for a widening interest rate spread between the US and Canada grows or gets snuffed out will be a key driver of how USD/CAD trades over the rest of the year.
Canadian Dollar Technical Analysis – USD/CAD Daily Chart
Source: TradingView, StoneX
As the chart above shows, USD/CAD has rallied each of the first four days so far this week to trade above 1.3800, essentially the pair’s highest level since last October. For now, there is a potential bearish divergence with the 14-day RSI that could hint at a near-term top around previous resistance in the 1.3850 level, but a strong bullish break above that area would likely erase the divergence.
A move above 1.3850 could expose the 2.5-year high around 1.3975 next, whereas a bearish reversal could take rates down toward the mid-1.3700s without interrupting the medium-term bullish trend.
-- Written by Matt Weller, Global Head of Research
Follow Matt on Twitter: @MWellerFX
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.
Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.
Contracts for Difference (CFDs) are not available to US residents.
FOREX.com is a trading name of GAIN Capital - FOREX.com Canada Limited, 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA is a member of the Canadian Investment Regulatory Organization and Member of the Canadian Investor Protection Fund. GAIN Capital – FOREX.com Canada Limited is a wholly-owned subsidiary of Stonex Group Inc.
Complaints are taken very seriously at FOREX.com. You can view our complaints procedure here.
© FOREX.COM 2025