The US dollar has weakened recently against other major currencies including the euro, pound and yen. While it may not have grabbed the headlines, there’s another currency we can add to that list: the Canadian dollar.
The Canadian dollar – which was trading at around C$1.45 per US dollar at the end of January – may continue to strengthen against its southerly neighbour in the near term, potentially reaching C$1.35 per US dollar. Let’s examine why.
The area between C$1.38 and C$1.39 has previously served as a resistance zone for USD/CAD, marking significant tops in 2022, 2023 and 2024. Each time, this area ended the dollar’s gains and led to a renewed period of Canadian dollar strength. The pattern changed in October 2024, when – after multiple failed attempts to break through resistance – USD/CAD finally pushed to a new high of C$1.45. Now, as USD/CAD declines from that peak, the old resistance area of C$1.38 to C$1.39 is providing support.
If USD/CAD falls below support at C$1.38, it could decline towards C$1.347, partly because there are no meaningful levels of support to slow such a move. A falling bear flag pattern also seems to be forming, suggesting that a breakdown may be imminent, potentially supporting a drop to around C$1.35. Meanwhile, the completion of the diamond reversal top that formed from December 2024 to March 2025 could imply a return to the pattern’s origin near C$1.35.
The USD/CAD chart pattern also shows a high degree of symmetry between the left and right sides. In other words, the decline on the right side is occurring at a similar pace to the earlier rise on the left. Completing this symmetrical pattern might suggest a return to the starting point around C$1.35.
Of course, if support at C$1.38 holds and the Canadian dollar does not strengthen further, a swift rise for the US dollar back towards C$1.41 cannot be ruled out.
Written by Michael J. Kramer, founder of Mott Capital Management
Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed.
No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction, or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.
The Canadian dollar – which was trading at around C$1.45 per US dollar at the end of January – may continue to strengthen against its southerly neighbour in the near term, potentially reaching C$1.35 per US dollar. Let’s examine why.
The area between C$1.38 and C$1.39 has previously served as a resistance zone for USD/CAD, marking significant tops in 2022, 2023 and 2024. Each time, this area ended the dollar’s gains and led to a renewed period of Canadian dollar strength. The pattern changed in October 2024, when – after multiple failed attempts to break through resistance – USD/CAD finally pushed to a new high of C$1.45. Now, as USD/CAD declines from that peak, the old resistance area of C$1.38 to C$1.39 is providing support.
If USD/CAD falls below support at C$1.38, it could decline towards C$1.347, partly because there are no meaningful levels of support to slow such a move. A falling bear flag pattern also seems to be forming, suggesting that a breakdown may be imminent, potentially supporting a drop to around C$1.35. Meanwhile, the completion of the diamond reversal top that formed from December 2024 to March 2025 could imply a return to the pattern’s origin near C$1.35.
The USD/CAD chart pattern also shows a high degree of symmetry between the left and right sides. In other words, the decline on the right side is occurring at a similar pace to the earlier rise on the left. Completing this symmetrical pattern might suggest a return to the starting point around C$1.35.
Of course, if support at C$1.38 holds and the Canadian dollar does not strengthen further, a swift rise for the US dollar back towards C$1.41 cannot be ruled out.
Written by Michael J. Kramer, founder of Mott Capital Management
Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed.
No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction, or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.