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 -3. and Fundamental Score for CAD is 6. So, base on the Fundamental Score, we predict mid-term downside price movement.

Market Overview & Performance

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

Currencies performance vs US dollar "USD"
Gold "XAU", recorded a 0.29% increase against us dollar.
Euro "EUR", performance has been -0.01% down so far
Australian dollar "AUD", has risen by 0.25%
New Zealand dollar "NZD", has risen by 0.07%
Japanese YEN "JPY", experienced -0.14% fall
Swiss franc "CHF", experienced -0.05% fall so far
Canadian dollar "CAD", has gained 0.05%
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 -5882 included 16384 long, 22266 short and -893 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 -893 repositioning Indicates more sell positions and price pressure in short-term.

CAD COT (Commitments of Traders):

Institutions Net Position on >Canadian Dollar is 36159 included 93899 long, 57740 short and 15109 position changed from last week.
So they mainly have a bullish view on this asset and bought CAD for higher prices in long-term.
Last week 15109 repositioning Indicates that they are optimistic about higher prices in mid-term.

Retail Traders:

Crowd traders or Retail traders are bullish on the USDCAD with 75% 25% 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 1.35871.
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 1.37881. 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.