USDCAD builds bullish momentum as it exits oversold territory

Since September 1, 2025, the USDCAD pair has been in an uptrend. After correcting from a local peak, the price found support near 1.37300 and rebounded. Right now, the pair is trading at 1.37951. 

On the daily chart, the Stochastic Oscillator (5, 3, 3, Simple) is generating a bullish signal. With %K at 23 and %D at 14, both lines are positioned low in the neutral zone. However, they are currently gaining momentum, suggesting that an upward surge is imminent. This shift is further supported by a bullish crossover between the %K and %D lines.

The On-Balance Volume (OBV) indicator corroborates the prevailing positive trend. Its trajectory points to a sustained recovery following an extended decline, signifying a measured resurgence of buying interest in the market.

Fundamentally, the USDCAD's gain is bolstered by sentiments surrounding the Bank of Canada. This month, investors predict interest rate cuts from both the Federal Reserve and the Canadian regulator. Although the Fed's rate reduction is largely priced in, traders anticipate a similar move by the latter.

Nevertheless, the Canadian dollar's depreciation is being curbed by the robust performance of commodity markets. As a commodity-backed currency, the Canadian dollar finds support in rising oil prices, a key country's export.

Overall, the pair has started to gain upward momentum, but it is still in its early stages. One important thing to watch is the OBV indicator. It will show if the growth is fast enough to breach the next resistance level around 1.37960. A sustained break above this zone would likely pave the way for further hikes toward 1.39000.

Here's a trading plan to consider:

Buy USDCAD at the current price. Take profit: 1.39000. Stop loss: 1.37300.

This forecast is valid from September 3 till September 10, 2025.