USD/CAD traded sideways on Wednesday in the North American session, near 1.3658. The move followed Monday’s action, when the Canadian Dollar rose 0.34% against the US Dollar and price was capped by that session’s range.
On Monday, the pair hit a daily high of 1.3709 and closed near 1.3644. This extended a six-day run of falling sessions, but Tuesday ended higher by 0.15% and formed a bullish piercing pattern.
Technical Levels In Focus
The Relative Strength Index shows momentum still leaning lower. If price breaks Tuesday’s swing low at 1.3631, it could test 1.3600, with the March 9 daily low at 1.3525 next.
To move higher, price needs to clear 1.3700 and then 1.3709. Resistance levels include the 50-day Simple Moving Average at 1.3727 and the 100-day Simple Moving Average at 1.3742, with 1.3800 above.
With the USD/CAD trading sideways around 1.3658, we see the market at a point of indecision. The key levels to watch are the 1.3709 resistance and the 1.3631 support. This tight range suggests that derivative traders should prepare for a potential breakout in the coming weeks.
A move to the upside, clearing 1.3700, would likely be driven by strength in the US dollar. The latest US inflation data for March 2026 showed a stubborn 3.1% reading, reinforcing the view that the Federal Reserve will not be quick to cut interest rates. Traders anticipating this could consider buying call options with a strike price near the 1.3727 moving average to capture a move toward 1.3800.
Options Strategies For Breakout Risk
On the other hand, if sellers push the pair below 1.3631, the focus will shift to a stronger Canadian dollar. WTI crude oil prices have remained firm, currently trading over $85 a barrel, which provides underlying support for the loonie. To position for this, we could look at buying put options with a strike around 1.3600, targeting a test of lower levels near 1.3525.
Given the conflicting momentum, a volatility play could be the most prudent strategy. We remember how the pair experienced sharp, unexpected moves in late 2025 following central bank commentary. A long straddle, buying both a call and a put option near the current price, would profit from a significant move in either direction before options expiry.
If we expect this consolidation to continue ahead of the next jobs reports, an iron condor might be appropriate. This strategy would involve selling out-of-the-money puts and calls, defining a range where we expect the pair to remain. For example, selling options outside a 1.3550 to 1.3750 channel could collect premium while the market waits for its next catalyst.
