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USD/CAD Drops Nearly 1.8% From Recent Highs
Traders' Opinions
Summary:
USD/CAD fell below 1.4050 as higher oil prices supported the Canadian Dollar and fading expectations of a near-term Fed rate hike weighed on the US Dollar. Further geopolitical developments and changes in Fed expectations remain key drivers.
Sell
TradingUSDCAD
EXP
1.40450
Entry Price
1.39750
TP
1.41500
SL
1.40607 +0.00035 +0.02%
0
Point
Flat
1.39750
TP
CLOSING
1.40450
Entry Price
1.41500
SL
The Canadian Dollar extended its rally for a fourth consecutive session on Tuesday, supported by rising crude oil prices and a weaker US Dollar. USD/CAD fell below 1.4050, leaving the pair nearly 1.8% below last week’s highs as markets reassessed the outlook for Federal Reserve policy.
Oil prices climbed to their highest levels since May as concerns about Middle Eastern supply disruptions intensified. US President Donald Trump’s decision to waive sanctions on Russia did little to ease market pressures, with continued attacks on vessels near the Strait of Hormuz raising fresh concerns about the reliability of energy shipments from the Gulf region.
Iran’s Revolutionary Guards Navy reported that two tankers were disabled and set ablaze by mines south of the Strait of Hormuz. Tehran has also threatened further action against the United States and Israel, including a possible closure of Hormuz and restrictions affecting the Bab el-Mandeb Strait and the Suez Canal. These developments have increased geopolitical uncertainty while supporting the Canadian Dollar, given Canada’s significant crude oil exports and the potential boost to energy revenues from higher prices.
Meanwhile, the US Dollar remains under pressure as traders increasingly expect the Federal Reserve to leave interest rates unchanged at its October 28–29 meeting. Futures-market data indicated an above-80% probability of no rate change, compared with less than 50% a month earlier. Reduced expectations for an imminent rate hike have weakened support for the greenback, adding to the downward pressure on USD/CAD.
Technical Analysis
USD/CAD remains firmly bearish on the M30 chart, trading near 1.4046 after extending its decline within a well-defined descending channel. The pair has consistently formed lower highs and lower lows since mid-October, indicating that sellers continue to dominate the short-term market structure. Recent attempts to recover have failed to produce a sustained reversal, reinforcing the prevailing downward bias.
The latest decline has pushed price below the 1.4057–1.4065 support zone, which previously acted as a consolidation area. This breakdown suggests that selling pressure remains strong, with the former support region now potentially serving as resistance. If the pair attempts a corrective rebound, a retest of this zone could attract renewed selling interest, particularly while price remains below the descending trendline.
On the downside, the first area to monitor is around 1.4015, where price may encounter temporary support. A decisive break beneath this level could expose the 1.3975 region, followed by the broader 1.3950–1.3955 area near the lower boundary of the descending channel. These levels align with the projected continuation of the current bearish structure.
Despite the strong downward momentum, a short-term pullback remains possible after the recent decline. A sustained recovery above 1.4065 would weaken the immediate bearish outlook, while a stronger move above the descending trendline could signal that sellers are losing control. Until such a recovery develops, the technical bias favors further downside, with potential selling opportunities on rebounds toward broken support.
TRADE RECOMMENDATION
SELL USD/CAD
ENTRY PRICE: 1.4045
STOP LOSS: 1.4150
TAKE PROFIT: 1.3975
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