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 4.5%. Latest change was Dec 18, 2024 (-25bp)%.
On that side the Bank of Canada policy is Dovish and (BOC) has set its interest rate to 2.75% by latest change, Mar 12, 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 Bearish and for the CAD is Weak Bearish.
Ziwox considering Weak Bearish bias for this asset and we expect prices to decline in the long-term.
Our Ziwox A, mid-term Fundamental Score for USD is 1. So, base on the Fundamental Score, we predict mid-term upside price movement.

Market Overview & Performance

In the current trading session, "Sydney", Market risk sentiment is Risk-ON. The Canadian Dollar and Australian dollar recorded the strongest performance, while the Switzerland Frank and Gold are weakest so far.

Currencies performance vs US dollar "USD"
Gold "XAU", recorded a -0.03% decrease against us dollar.
Euro "EUR", performance has been -0.02% down so far
Pond "GBP", performance has been -0.02% down as of now
Australian dollar "AUD", has risen by 0.08%
New Zealand dollar "NZD", has risen by 0.01%
Japanese YEN "JPY", experienced 0.01% rise
Swiss franc "CHF", experienced -0.09% fall so far
Canadian dollar "CAD", has gained 0.13%
Market risk sentiment is ON, This means Investors embrace risk, driving demand for riskier assets and higher-yielding currencies while safe-haven assets weaken.Due to the market risk sentiment, USDCAD price reduction is likely. Becasue investors are optimistic and willing to take higher risk on CAD and leading to increased demand for riskier assets like stocks, commodities, and higher-yielding currencies. Safe-haven assets like the USD, JPY, and gold typically weaken as confidence grows.

Market Sentiment and Positioning

USD COT (Commitments of Traders):

Institutions Net Position on >U.S. Dollar Index is -4282 included 16873 long, 21155 short and 1752 position changed from last week.
So they mainly have a bearish view on this asset and sold USD for lower prices in long-term.
Last week 1752 repositioning Indicates closed positions and short-term profit-taking.

CAD COT (Commitments of Traders):

Institutions Net Position on >Canadian Dollar is -63452 included 22149 long, 85601 short and -10285 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 -10285 repositioning Indicates more sell positions and price pressure in short-term.

Retail Traders:

Crowd traders or Retail traders are bullish on the USDCAD with 55% 45% ratio. 6494 long pos and 5670 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 1.35705.
Technical trend is Sell, So If the pair continues to weaken, this support could become a significant area to watch for potential reversal or consolidation.
On the upside, there is key resistance near 1.37616. Technically, If the pair continues to the upside, this resistance level could become a significant area to watch for sell entery potential.