Failed attempts to breach resistance do not dent USDCAD bullish momentum

USDCAD is currently hovering around 1.36985, recovering from a short-lived pullback seen earlier this week. The pair’s dynamic is primarily driven by upcoming central bank meetings, set against a temporary lull in the energy market.

On Wednesday, the Bank of Canada (BoC) is unanimously expected to hold its interest rate at 2.25%. However, the decision itself may take a backseat to Governor Tiff Macklem's subsequent commentary. If he strikes a dovish chord—voicing concerns over the country's sluggish growth—the BoC's future monetary path could be revised downward, putting additional pressure on the loonie.

Federal Reserve (Fed) officials are also meeting today. While no change in borrowing costs is anticipated, according to Macquarie analysts, Chair Jerome Powell's tone is likely to lean hawkish. Traders have already trimmed their bets on rate cuts this year, now pricing in just one reduction instead of two—a solid tailwind for the greenback.

As for the options, one-week and one-month CAD risk reversals remain near their highest levels since last April, when sweeping trade restrictions sent shockwaves through the markets. Thus, we see that investors continue to hedge against a softer loonie.

A glance at the daily USDCAD chart shows that the pair has been knocking on the door of 1.37500 since late January. So far, each time, sellers have pushed it back. Meanwhile, the Chaikin Oscillator is edging lower, giving up last week’s attempts to rise. Nevertheless, the indicator remains in the positive zone, suggesting that large players are using short-term rebounds to take profits rather than build positions.

That said, pullbacks from the stubborn resistance offer a favorable entry point during corrections. Fundamental factors keep benefiting the greenback, while any decline in crude prices this week would further erode support for its commodity-linked Canadian counterpart.

Consider the following trading strategy:

Buy USDCAD at the current price, with Take profit at 1.37800 and Stop loss at 1.36500.

The forecast is valid from March 18 till March 25, 2026.