USD/CAD Technical Breakdown Sept 22 2025

The U.S. dollar has pushed through 1.38 against the Canadian dollar, with USD/CAD testing resistance levels at the start of the week. The move comes as traders brace for a flood of Federal Reserve speeches and Friday’s Core PCE inflation release, the Fed’s preferred measure of price pressures. Oil markets and Canadian fundamentals will also play a key role in shaping the loonie’s direction.

USD/CAD has broken through a key resistance cluster around 1.3770-1.3800. A sustained close above 1.3800 opens the way toward 1.3850, with scope to test 1.3900 if momentum holds. Support is now layered at 1.3760-1.3750.

The U.S. dollar started the week stronger, supported by expectations for clarity from Federal Reserve speakers after last week’s rate cut. More than 18 Fed events are scheduled, with particular attention on Powell, Hammack, and Musalem – two of the more hawkish governors. Their tone could guide market expectations for the pace of easing into Q4.

New Fed Governor Stephen Miran dissented in favour of a deeper 50bps cut last week. He is due to explain his reasoning in a speech, though analysts suggest this dissent was carefully managed to maintain Fed unity.

The Fed has highlighted labour market concerns as the main driver of policy. Last week’s U.S. jobless claims showed improvement, reinforcing the Fed’s cautious stance. With little major data until Friday, Core PCE inflation will be the key test. A softer reading below 2.9% YoY would weigh on the dollar, while a sticky print above 3% would reassert USD strength.

Meanwhile, President Trump has renewed calls for the Fed to cut rates more aggressively, though markets remain focused on Powell’s messaging rather than politics.

The Canadian dollar continues to take direction from crude oil. EIA stock data on Wednesday could provide a volatility trigger, with weaker oil prices typically weighing on the loonie. Canada’s domestic calendar is relatively light this week, meaning USD/CAD will largely follow the U.S. dollar narrative. Fiscal and growth concerns continue to temper confidence in CAD.

The base case is for USD/CAD to consolidate between 1.3750 and 1.3850 as traders await Fed commentary and Friday’s PCE. A bullish scenario would see hawkish Fed signals or weaker oil driving a break above 1.3850, opening the path toward 1.3900. For strategies to manage currency exposure and volatility, see our comprehensive forward contracts guide. Conversely, a dovish Fed tone or a sharp rebound in crude could drag USD/CAD below 1.3750, exposing 1.3700.

A tactical approach is to buy dips above 1.3780 with stops below 1.3750, targeting 1.3850 and 1.3900. Alternatively, fading failure above 1.3850 remains an option if oil prices firm.

USD/CAD starts the week on the front foot, breaking above a key resistance cluster near 1.38. With the loonie lacking domestic drivers, the pair’s path will hinge on Fed communication and U.S. inflation data. Until Friday’s PCE, USD/CAD looks supported on dips, with a bias toward testing 1.3850-1.3900 if Fed speakers lean hawkish and oil prices stay subdued.