Over the past 24 to 48 hours, the USD/CAD pair has shown notable strength, touching a near two-week high during the Asian session and consolidating around the 1.3700 level. This upward momentum was primarily driven by better-than-expected US economic data alongside the Federal Reserve’s January meeting minutes, which buoyed the US dollar while weighing on the Canadian dollar.

Specifically, the dollar displayed resilience across several reports, with investors eagerly anticipating a breakout beyond the key 1.3700 resistance—a level that has repeatedly served as a structural pivot. The USD has strengthened for six consecutive days, reflecting market optimism about the US economic outlook. Conversely, the Canadian dollar faced selling pressure amid weakness in commodity prices and equity markets, weighing on its performance against the greenback.

For the average investor, this rally in the dollar can be seen as a “show of economic strength” in the US fundamentals underpinning the USD’s rise. The persistent climb in USD/CAD highlights this dynamic. Investors should keep an eye on the upcoming Fed minutes release, which will provide further guidance on the Fed’s policy stance and potentially affect dollar momentum. Even with the current trend, caution remains warranted given possible policy shifts.

Daily Chart

The daily chart shows a steady uptrend for USDCAD, particularly rebounding from the 1.3500 support zone and approaching the significant 1.3700 resistance level. The 50-day moving average (~1.37189) and 200-day moving average (~1.38281) remain above the current price, suggesting room for further upward movement once the overhead resistance is cleared. Bollinger Bands have tightened, indicating reduced volatility and potential for a breakout. The MACD histogram is expanding on the positive side, reinforcing strengthening bullish momentum, positioning the pair in a positive trend on the daily timeframe.

1H Chart

The hourly chart over the past 3-5 days indicates short-term consolidation with a bullish bias. Price tests the 1.3700 resistance multiple times without a breakout, forming a tight range. Short-term moving averages (20 and 50 periods) are converging and hinting at an impending breakout. Bollinger Bands show decreasing volatility with the lower band serving as firm support. A potential MACD bullish crossover supports buyers gaining momentum. The recent hammer candlestick suggests buying pressure and price stabilization in the short term, implying an imminent directional move.

Technical Trend:  Consolidation with bullish bias

Technically, USDCAD is forming a flag consolidation pattern, with a firm trendline support emerging near 1.3620 while resistance holds around 1.3700. The recent hammer candlestick indicates buyers defending support levels, while the MACD is about to produce a bullish crossover, signaling rising momentum. A decisive daily close above 1.3700 would confirm breakout potential and invite further gains. Conversely, failure to sustain this level and break below 1.3650 support could trigger a short-term pullback. Traders are advised to use moving averages and support/resistance levels to manage entries and exits prudently.

Today’s economic calendar features key releases impacting USDCAD, notably Canada’s trade balance scheduled at 14:30 GMT+1 (22:30 HKT) with a forecasted deficit of -2 billion CAD, slightly improved from prior data. Meanwhile, several US data points including the Philadelphia Fed Index, weekly jobless claims, and trade balance are set for the same time window. Better-than-expected Canadian trade data could relieve some pressure on the CAD, capping USDCAD gains in the short term. Conversely, strong US economic readings would continue to bolster USD strength. Aside from these, no major events are expected to directly sway USDCAD today. Market participants should also watch for potential volatility from Federal Reserve officials’ comments in the afternoon/evening.

Resistance & Support

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