Canadian Dollar Trades Sideways in Tight Range

The Canadian Dollar (CAD) continues to trade within a narrow range, finding support from favorable bond market dynamics while facing pressure from weaker energy prices and ongoing volatility in global equity markets. Overall price action remains contained, with USD/CAD hovering slightly below its estimated fair value.

According to Scotiabank’s chief FX strategists, Shaun Osborne and Eric Theoret, the balance of forces affecting the CAD has resulted in limited directional momentum. While trends in cash bond and swap spreads are providing underlying support for the currency, softer oil prices and unstable equity markets are acting as restraining factors.

As a result, the fair value estimate for USD/CAD has edged slightly higher to around 1.3805. Even so, the U.S. dollar continues to trade at a modest discount relative to this equilibrium level, reinforcing the current range-bound environment.

Trade Policy Signals Cap USD Momentum

Recent comments related to the USMCA have also helped limit upside pressure on the U.S. dollar. Bloomberg reported that U.S. Trade Representative Jamieson Greer informed lawmakers during a briefing that he supports maintaining U.S. participation in the trade agreement. However, he also noted that the president intends to keep all strategic options open.

Technical breakdown of USD/CAD rangebound movement, highlighting price consolidation and resistance/support zones in the FX market.

These remarks have reduced the likelihood of near-term trade disruptions, helping to stabilize the CAD while simultaneously preventing a strong USD rally. The absence of clear policy shifts has encouraged continued consolidation rather than a decisive breakout.

Technical Levels Reinforce Range Trading

From a technical perspective, USD/CAD has settled into a sideways trading pattern after dropping to the low 1.37 area earlier in the week. Resistance appears firm around the 1.3790–1.3800 zone, which has repeatedly capped upside attempts. A sustained move above this area could open the door for a rebound toward the mid-to-upper 1.38 range.

On the downside, support is holding near 1.3725–1.3730. As long as price action remains confined between these levels, the pair is likely to continue trading sideways, reflecting a market that lacks a strong catalyst for a breakout in either direction.

Make money without lifting your fingers: Start using a world-class auto trading solution.

EightCap, your trusted Partner in CFDs, Cryptocurrencies and Stocks.