The USDCAD has seen plenty of up-and-down price action this week, but one message has been consistent: buyers have struggled to sustain momentum near the highs for the year.
The highs from October 5 and October 9 established a ceiling near 1.4292–1.4298. Monday’s high fell short at 1.4286. On Wednesday, the stronger-than-expected CPI data gave buyers another opportunity to push higher, but the rally stalled at 1.4298.
From there, the price rotated lower and closed back below the 100- and 200-hour moving averages near 1.4244.
Go figure. Stronger inflation. A lower USDCAD.
Yesterday’s higher-than-expected PPI data did not turn the tide either. Instead, the pair extended its decline, breaking below a key floor between 1.41922 and 1.4204.
Technical levels do matter. The buyers could not get through the ceiling. Once the moving averages and floor gave way, sellers had more control.
A longer-term support area gives buyers a place to lean
The selling continued today, taking the price into a swing area between 1.41297 and 1.4153.
That area supported the pair from mid-June into mid-July and also lines up with swing highs from November 2025. Today’s low reached 1.4146, putting the price inside that support zone.
The import/export price data provided another sign of inflation pressure—and another opportunity for traders to buy the US dollar.
Take a look at these concerns.
- Fuel and lubricants: +34.5%. Natural gas rose 96.5%, although its small weight—roughly 0.3%—limits its overall influence.
- Industrial supplies and materials: +20.4%.
- Unfinished metals: +25.3%; finished metals: +18.5%.
- Industrial supplies excluding fuels: +13.0%.
- Nonelectrical machinery: +10.4%; capital goods: +8.4%.
- Imports excluding food and fuels: +6.2%.
Food, autos and consumer goods are comparatively less troublesome: annual increases were 2.9%, 1.1% and 2.7%, respectively.
Import takeaway: The persistent concern is the cost of equipment and production inputs. Energy explains September’s biggest jump, but it does not explain away the broader inflation pressure.
The USD is finding a bid. The difference this time?
Although the USD moved lower on the CPI and the PPI, today we are seeing a modest bid. Why? The USDCAD had already moved lower from its highs for the year and reached an established technical support area. Buyers now have a level against which to define their risk.
The question is whether they “can hold the support?”.
A move back above 1.4153, followed by an ability to stay above it, would strengthen the case for a bounce. While the price remains inside the zone, buyers and sellers are still battling.
The lower boundary at 1.41297 is the key downside risk level. Stay above it, and buyers retain an opportunity to build a recovery. Move below it and stay below, and another layer of support gives way, opening the door for further selling.
What would a recovery need to clear?
On further upside momentum, the targets come in at:
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1.41922–1.4204: The broken floor. Prior support becomes potential resistance.
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1.4223: The falling 100-hour moving average.
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1.4233: The falling 200-hour moving average.
Holding support is a start. Getting back above those resistance levels would provide evidence that buyers are taking back control.
The trading lesson: Prepare before you trade
Hotter inflation data can give traders a reason to buy the dollar. It does not guarantee that the price will move higher—or stay higher.
This week, buyers had their opportunities near the highs and could not sustain the momentum. Today, they are trying again from a different technical location: support.
For traders, that creates a framework. Know where support is. Know what would invalidate the bounce. Know where the next resistance levels could stall a recovery.
In the video above, I detail the technical levels in play and show why they matter.
You need to prepare for your trade. Not just trade.
This article was written by Greg Michalowski at investinglive.com.