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Published: 6 October 2026,08:13
Daily Market Analysis New
*The Canadian dollar has fallen to an 18-month low, with USD/CAD trading near 1.42–1.43 amid sustained selling pressure.
*U.S. dollar strength , weaker Canadian activity, falling oil prices and a widening U.S.–Canada rate differential are weighing on the currency.
*Strong job growth could provide temporary relief, while another weak report may reinforce dovish BoC expectations and drive USD/CAD higher.
The Canadian dollar has faced sustained downward pressure in recent sessions, touching 18-month lows against the U.S. dollar and extending a multi-week losing streak. USDCAD has traded near the 1.42–1.43 region, reflecting broad underperformance of the loonie amid a combination of domestic and external headwinds.
Several bearish factors have weighed on the currency. Persistent U.S. dollar strength, driven by relative economic resilience and shifting global risk flows, has been a primary driver. Softening Canadian economic indicators, including a fourth consecutive monthly contraction in the services sector PMI, have raised concerns over growth momentum. Declines in crude oil prices have further undermined the commodity-linked loonie, given Canada’s status as a major energy exporter. Meanwhile, the interest-rate differential with the United States has widened, as the Bank of Canada maintains a more cautious policy stance relative to the Federal Reserve. Rising speculative short positions and lingering trade tensions have added to the pressure.
Attention now turns to the Canadian employment report scheduled for release later this week, covering September labour market conditions. A stronger-than-expected reading on job creation or a decline in the unemployment rate could provide some relief for the Canadian dollar by tempering dovish expectations for the Bank of Canada and narrowing the rate gap with the United States. Conversely, another soft print would reinforce the narrative of domestic economic weakness, likely extending the loonie’s underperformance and supporting further upside in USDCAD. Traders will also monitor wage growth details for clues on underlying inflation pressures that could influence the central bank’s next policy decision.
USD/CAD remains firmly within an upward trajectory, having advanced more than 3.7% from its September low to reach its highest level since April 2025. The month-long rally highlights sustained buying pressure and confirms that the pair’s broader technical structure remains bullish.
However, momentum indicators are beginning to signal that the advance may be losing strength. Both the Relative Strength Index and MACD have turned lower despite the pair trading near recent highs, creating an early bearish divergence and raising the prospect of a technical correction.
Attention is now focused on the ascending trendline supporting the rally. A decisive break and sustained close below this trendline would provide stronger confirmation that bullish momentum has deteriorated and could trigger a deeper retracement. Conversely, holding above the trendline would keep the prevailing uptrend intact, although further consolidation may be required before the pair can resume its advance.
Resistance Levels: 1.4325, 1.4440
Support Levels:1.4150, 1.4060
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