The loonie has recovered in the US session after starting the day on the back foot. The move was more driven by the US dollar than any developments on the side of the Canadian Dollar.
The loonie has come under pressure in recent days as oil prices have also retreated to fresh lows. When it comes to USD/CAD, the loonies weakness coincided with a rally for the US Dollar which has defied the US Government shutdown and US-China tensions to leave the US Dollar Index (DXY) hovering near recent highs.
Technical Analysis – USD/CAD
Back to the technicals though and USD/CAD has broken the channel which had help price over for just over two months. This sets up USD/CAD for a potential 280 pip move.
The medium-term outlook does look positive for USD/CAD as price has broken above the psychological 1.4000 handle and the 200-day MA. This is the first time USD/CAD trades above the 200-day MA since April 10, 2025. Funny enough this also coincided with USD/CAD breaking below the 1.4000 handle as is the case with the break above this time around.
This makes the 200-day MA key for me and thus if we are to see the bullish move continue, price needs to remain above the 200-day MA if we get any pullback in price.
USD/CAD Daily Chart, October 14, 2025
Source: TradingView.com (click to enlarge)
Dropping down to the four-hour chart and you can see that we have just had a bearish engulfing candle close.
Together with the daily hovering near overbought territory (it was in overbought territory when USD/CAD was at its daily high) could lead to a slightly deeper pullback.
If this does materialize, the swing low at 1.39840 is very close to the 200-day MA on the daily timeframe, which rests around
Thus a hold above this level may be the sign for those would be bulls looking to get involved.
USD/CAD Four-Hour Chart, October 14, 2025
Source: TradingView.com (click to enlarge)
Economic Data Ahead
The US Government shutdown remains in effect and thus data from a US perspective remains out of reach. There is also a lack of high impact data from Canada this week with a speech by Bank of Canada Governor Tiff Macklem the highlight.
This could leave the technicals as a major driver for price moves while trade war developments between the US and China will also play a role.
Next week is much more interesting. We get the releases of key inflation data from the US & Canada.
For all market-moving economic releases and events, see the MarketPulse Economic Calendar.
Client Sentiment Data – USD/CAD
Looking at OANDA client sentiment data and market participants are short on USDCAD with 75% of traders net-short. I prefer to take a contrarian view toward crowd sentiment and thus the fact that so many traders are short means USD/CAD prices could rise in the near-term.
