Two Canadian dollar examples illustrate this performance well, considering the impact of the strong US dollar. Technically, it continues to hold above the 20-day Exponential Moving Average (EMA), currently at approximately 1.3901. The short USD/CAD pair is trading near the top of a four-month range, at roughly 1.3980. This bullish near-term outlook is pretty much completely due to the strong US Dollar.
According to recent market data, it appears that the US Dollar is flexing some serious muscle. We find that this strength overall exerts a powerful drag on USD/CAD performance. The pair’s 14-day Relative Strength Index (RSI) crossed above the 70 mark today. This indicates very strong bullish momentum in the markets. Traders forecast that if the USD/CAD breaks above the psychological level of 1.4000, it may trigger further upward movement. They are targeting the April 9 low of 1.4075 as the next important resistance barrier.
Once again, the US Dollar Index (DXY) is in the limelight, tracking the Greenback’s strength against a basket of six other major currencies. The dollar is currently re-testing a two-month high of 99.00. Generally stronger performance of the DXY feeds into the upward trend of USD/CAD. This movement reflects a growing confidence in the US economy relative to that of Canada.
Canadian economic data will certainly be the focus of market participants’ sharp attention. Recent projections are ominous for the continuance of strong job quality in the Canadian economy. They predict the Unemployment Rate to rise from September’s 7.1% to 7.2%. With unemployment rising, this may be a sign that the labor market’s rate of expansion is slowing. This continued stagnation would be bad news for the overall Canadian economy and bad news for the CAD.
The upcoming labour market data is scheduled for release on Friday, October 10, 2025, at 12:30 PM. Traders are specifically keeping their eyes peeled on this data for signs of a strengthening economy. They’re keeping their eyes peeled for any red flags that may affect USD/CAD’s trajectory.
If USD/CAD fails to hold on to its bullish momentum and breaks below significant support, it may be at risk of correction. In particular, a decline under the August 7 bottom of 1.3722 could send the pair to the psychologically-important mark of 1.3600. Traders now need to watch the June 16 low of 1.3540. This is the key level to monitor should the bearish momentum increase.