The Canadian Dollar (CAD) stayed fairly steady against a stronger US Dollar (USD). It held up better than many major currencies, helped by stable risk mood and record levels in the S&P 500.
Moves in the CAD were limited, with little domestic news to drive trading. Day-to-day direction was tied mainly to the wider USD trend and the market risk backdrop.
Stocks were slightly lower in early trading, after the S&P 500 reached another record high the day before. The USD/CAD rate rose for a third day, but the short-term setup was still described as bearish.
The USD move was framed as a small rebound from Tuesday’s low, with patterns such as a bear flag or wedge mentioned. Trend indicators were said to remain bearish across intraday, daily, and weekly timeframes.
Resistance for USD/CAD was placed in the low to mid-1.37 area. Support was seen at 1.3625, with the next level described as the low 1.35s.
The Canadian Dollar is showing notable resilience, outperforming other major currencies against the US Dollar. This strength is supported by robust risk sentiment, with the S&P 500 closing above 5,900 last week. It suggests that positive market mood is currently outweighing broad USD strength for the CAD.
Given the weak technical backdrop for USD/CAD, we see the current minor bounce as an opportunity to position for further downside. We view any move into the low-to-mid 1.37s as a strong selling zone for entering short futures positions or buying put options. Trend indicators across weekly and daily charts reinforce this bearish bias.
Fundamentally, the CAD is underpinned by firm WTI crude prices, which have held above $85 per barrel this month. Canada’s latest CPI reading for March 2026 came in at a stubborn 2.9%, suggesting the Bank of Canada may remain hesitant to cut rates ahead of the Fed. This policy divergence gives the CAD a supportive yield advantage.
This marks a significant shift from the market dynamics we observed in 2025, when aggressive Fed tightening consistently pushed the USD higher. The failure of USD/CAD to break and hold above the 1.38 level earlier this year indicates that the upward momentum from last year has faded. Traders should adjust for this new regime.
For traders using options, consider establishing bearish positions like bear put spreads to cap risk while targeting a move lower in the pair. The initial support at 1.3625 serves as a first target, with a fuller move toward the low 1.35s being the ultimate objective in the coming weeks. Monitor these levels closely as potential profit-taking zones.
