USD/CAD steadies after the loonie hits a 19-month low

The policy rate gap narrowed on October 28, when the Bank of Canada raised its overnight rate by 25 basis points to 2.50%, its first increase since July 2023. The outlook for further tightening remains uncertain, as discussed in our coverage of JPMorgan’s Canadian rate outlook. In September, the total value of Canadian building permits fell 4.1%, or C$552.8 million, to C$12.9 billion. Residential permits fell by C$475.7 million as a C$529.3 million decline in the multi-family segment outweighed a C$53.6 million increase in single-family permits. Non-residential permits fell by C$77.1 million, with institutional permits down C$171.5 million and industrial permits up C$90.9 million, according to Statistics Canada.

The US Dollar Index (DXY) stood at 103.18 early on Friday. Fed officials have left open the possibility of a larger rate increase in December. A November 13 snapshot of CME FedWatch put the implied odds at 89% for a 25-basis-point hike and 11% for a 50-basis-point move. Oil prices rose on Thursday after US President Donald Trump said Washington did not need a deal with Iran, reviving concerns about Middle East oil supplies.

Support and resistance levels

On the daily chart, USD/CAD is trading near the upper end of a local ascending triangle spanning 1.4000 to 1.4320.

Technical indicators favor the upside. The gap between the Alligator’s moving averages is widening, with the faster averages well above the slower ones. The Awesome Oscillator (AO) histogram is forming corrective bars above zero.

Support levels are 1.4200 and 1.4040.

Resistance levels are 1.4290 and 1.4430.

Trading scenarios and USD/CAD forecast

A sustained move above 1.4290 could trigger the long setup, with a target at 1.4430 and a stop-loss at 1.4200. The expected time horizon is seven days or longer. A sustained break below 1.4200 could trigger the short setup, with a target at 1.4040 and a stop-loss at 1.4300.