USDCAD Analysis

Introduction

The USD/CAD pair is closely tied to the price of oil, as Canada is a major oil exporter. The price of crude oil often influences the CAD’s strength, with the Canadian Dollar typically appreciating when oil prices rise. The Bank of Canada (BoC) influences the currency through interest rate decisions and its economic outlook. Additionally, the USD/CAD is impacted by US economic performance and trade relations between the US and Canada.

Fundamentals and Interest Rates

The Federal Reserve policy is Dovish with the (FED) current Interest rate 3.75%. Latest change was Dec 10, 2025 (-25bp)%.
On that side the Bank of Canada policy is Dovish and (BOC) has set its interest rate to 2.25% by latest change, Oct 29, 2025 (-25bp).
(FED) Higher interest rates generally lead to higher returns on investments denominated in USD. This tends to attract foreign capital into USD assets.

Based on the economic and macro fundamental data, The Fundamental Bias of USD is Moderate Bullish and for the CAD is Weak Bearish.
Ziwox considering Moderate Bullish bias for this asset and we anticipate long-term price increases.
Our Ziwox A, mid-term Fundamental Score for USD is 7. and Fundamental Score for CAD is -2. So, base on the Fundamental Score, we predict mid-term upside price movement.

Market Overview & Performance

In the current trading session, "Sydney & Tokyo", Market risk sentiment is Strong Risk-OFF. The United States Dollar and Canadian Dollar recorded the strongest performance, while the Gold and Australian dollar are weakest so far.

Currencies performance vs US dollar "USD"
Gold "XAU", recorded a -1.81% decrease against us dollar.
Euro "EUR", performance has been -0.3% down so far
Pond "GBP", performance has been -0.37% down as of now
Australian dollar "AUD", has dropped by -0.44%
New Zealand dollar "NZD", has dropped by -0.43%
Japanese YEN "JPY", experienced -0.33% fall
Swiss franc "CHF", experienced -0.33% fall so far
Canadian dollar "CAD", has lost -0.12%
Market risk sentiment is OFF, Investors seek safety, favoring safe-haven currencies and assets while selling off riskier investments.Due to the market risk sentiment, USDCAD price increase is likely. Becasue investors become risk-averse from CAD, seeking safety amid uncertainty or market turmoil, leading to a sell-off in riskier assets and a flight to safe havens like the USD, JPY, and gold. Currencies tied to riskier economies (e.g., AUD, NZD) tend to weaken.

Market Sentiment and Positioning

USD COT (Commitments of Traders):

Institutions Net Position on >U.S. Dollar Index is 3617 included 20457 long, 16840 short and -76 position changed from last week.
So they mainly have a bullish view on this asset and bought USD for higher prices in long-term.
Last week -76 repositioning Indicates closing positions, short-term profit-taking, or a general pessimism about prices.

CAD COT (Commitments of Traders):

Institutions Net Position on >Canadian Dollar is -1602 included 62382 long, 63984 short and -2488 position changed from last week.
So they mainly have a bearish view on this asset and sold CAD for lower prices in long-term.
Last week -2488 repositioning Indicates more sell positions and price pressure in short-term.

Retail Traders:

Crowd traders or Retail traders are bullish on the USDCAD with 53% 47% ratio. 0 long pos and 0 short position.
We generally adopt a contrarian approach towards crowd sentiment and we give probability USDCAD prices may decrease.

Technical Levels and Support/Resistance

The USDCAD pair is approaching a critical technical support level near 1.38307.
Technical trend is BUY, If the pair continues to weaken, this support could become a good area to enter a long positions.
On the upside, there is key resistance near 1.39571. Technically, A break above this resistance could signal a shift in momentum, but need to get a confirmation in this area due to the reversal or correction potential.