Forex Trading Tools and Services

Currencies

USD/CAD Holds Firm Above Mid-1.3900s on Mixed Signals: Oil Prices Drag Loonie While US Credit Downgrade Cuts Gains

  • BY
  • May 19, 2025
  • 0 Comments

USD/CAD currency pair holds firm above the mid-1.3900s, trading in a comfortable range on mixed market signals. Weaker crude oil prices continue to suppress the commodity-sensitive Canadian dollar, lending some support to the USD/CAD. But bearish pressure on the US dollar from a recent credit rating downgrade and anticipation of future Federal Reserve rate cuts dampen the pair’s upside. Moreover, increasing optimism surrounding a possible US-Canada trade agreement provides further warning for bullish traders. There is no important economic data due on Monday, so market attention turns to FOMC speeches and movements in oil prices, which could present short-term trading opportunities. KEY LOOKOUTS • USD sentiment could be influenced by statements from key FOMC members. • Since Canada’s dollar is heavily influenced by crude prices, dramatic shifts in oil markets will also affect the pair’s momentum. • Additional news or responses about the US government’s credit downgrade could continue to put pressure on the USD and influence the currency pair. • News or negotiations of a possible trade deal could drive the Canadian dollar higher and curb USD/CAD’s advances. Market participants will carefully monitor forthcoming Federal Reserve speeches to read tea leaves about the direction of US interest rates, which can have a profound effect on the USD/CAD pair. In the interim, crude oil price volatility continues to be a key factor, as it directly affects the commodity-sensitive Canadian dollar. Moreover, any subsequent developments or market responses concerning the recent US credit rating downgrade will tend to put pressure on the strength of the US dollar. Lastly, developments in US-Canada trade talks will be watched closely, as a prospective agreement would strengthen the Canadian currency and cap the pair’s upside potential. Traders will look to Federal Reserve rhetoric for direction on interest rates, while moves in the oil price remain a big influence on the Canadian dollar. Events surrounding the US credit rating downgrade and US-Canada trade negotiations will also be important in determining the near-term direction of USD/CAD. •  USD/CAD stays firm above mid-1.3900s, trading in a familiar range. •   Weaker crude oil prices support the Canadian dollar, underpinning USD/CAD gains. •  The US dollar is under pressure due to a recent credit rating downgrade. •  Federal Reserve rate cut expectations contain the USD’s upside potential. •  Hopes for an imminent US-Canada trade agreement bolster the Canadian dollar. •  No significant economic data releases are scheduled from the US or Canada on Monday. •  Future Federal Reserve speeches and oil price actions may generate short-term volatility. USD/CAD currency pair keeps trading steadily within a well-known range as mixed political and economic forces determine market sentiment. The Canadian currency continues to be driven by fluctuations in oil prices, indicative of the nation’s close association with the energy industry. And other events like the US government’s credit downgrade and US monetary policy expectations help trigger wary trading practices. USD/CAD DAILY PRICE CHART CHART SOURCE: TradingView Moreover, continuing discussions among US and Canadian policymakers regarding trade policy policy give some hope of increased economic collaboration, and that can provide a boost to the Canadian dollar. With no significant economic data due in the near future, investors are focusing intently on statements from major policymakers as well as trends in global oil markets for hints about the currencies’ future path. Generally, traders are being cautious, weighing these different factors as they try to navigate the situation. TECHNICAL ANALYSIS USD/CAD currency pair is stuck in a well-consolidated range, indicating minimal momentum for a definitive break. Crucial support zones in the vicinity of the mid-1.3900s have remained intact, whereas resistance around the 1.4000 level continues to limit upside attempts. Minimal directional cues point to the fact that traders are holding back in anticipation of sharper market drivers in order to initiate larger positions. Momentum indicators and moving averages at this point in time indicate a neutral position, hinting at the pair’s consolidation amidst mixed fundamental forces. FORECAST If USD/CAD succeeds in breaching the crucial level of resistance at 1.4000, it could pave the way for more gains. A rise in the US currency—perhaps inspired by comments from Federal Reserve officials being hawkish or an oil price rebound—would most likely fuel this movement. Any delays in US-Canada trade talks and any setbacks could also press down on the Canadian currency, leaving more latitude to the USD/CAD exchange rate to increase. To the negative, fresh strength in crude oil prices would add to the Canadian dollar and exert downward pressure on the USD/CAD. Advancements in US-Canada trade negotiations or other better-than-expected economic news in Canada could also add to the loonie. Additionally, if the US dollar continues to get battered by issues like the credit rating downgrade or decelerating economic growth, the pair would test support levels in the mid-1.3900s or even extend lower.

Read More
Currencies

USD/CAD Approaches 1.3800 Due to Diplomatic Market Sentiment and Expectation of Fed Interest Rate Decision

  • BY
  • May 7, 2025
  • 0 Comments

USD/CAD currency pair has risen towards 1.3800 since investors take a conservative approach following the Federal Reserve’s expected interest rate decision. Although the Fed is likely to leave rates unchanged, market focus is on comments by Chair Jerome Powell in light of existing trade tensions and political pressure from President Trump. The Canadian Dollar (CAD) is encountering some headwinds even as risk sentiment has improved in the wake of a joint press conference between Canadian Prime Minister Mark Carney and US President Donald Trump. Nonetheless, concerns about Canada’s domestic economic data, such as a sharp decline in the Ivey PMI, are dragging the CAD down. In the meantime, senior-level negotiations between US and Chinese officials will be held in Geneva, further complicating global trade dynamics. KEY LOOKOUTS • Market participants will be watching closely for the Fed’s interest rate move and Chair Jerome Powell’s remarks, especially on possible future rate cuts and the economic effects of continued trade tensions. • The result of US-Canada trade talks, particularly after the joint press conference between President Trump and Prime Minister Carney, will be instrumental for the CAD. Any news on tariffs or trade deals could have a strong impact on the pair. • The high-level meeting between US Treasury Secretary Bessent, Trade Representative Greer, and Chinese Vice Premier He Lifeng in the coming days may shift global trade sentiment, impacting the USD and CAD. • The steep fall in Canada’s Ivey PMI indicates diminishing business sentiment, and further dismal economic data will place extra stress on the CAD in the short term. USD/CAD pair moves towards 1.3800, market participants stay nervous in anticipation of the Federal Reserve interest rate decision, with market focus on Chair Jerome Powell’s remarks on potential rate cuts and their implications during the prevailing uncertainty over trade. The result of US-Canada trade negotiations, especially after the recent encounter between Prime Minister Mark Carney and President Donald Trump, is also a critical consideration, since any development or reversal in tariff negotiations may impact the CAD’s performance. Also, the high-level US-China trade talks scheduled this weekend might affect global risk sentiment, impacting both currencies in turn. At the same time, Canada’s weak Ivey PMI provides a hint that business sentiment may slow down, exposing the CAD to more downward risks if domestic economic indicators remain weak. USD/CAD currency pair is moving towards 1.3800 as market focus shifts to the Federal Reserve interest rate decision and US-China-Canada trade negotiations. Canada’s softening economic indicators, led by a steep decline in the Ivey PMI, put more pressure on the CAD. •  The pair is quoted at 1.3790, making up losses from the last session as the US Dollar strengthens. •   Market players are wary in front of the Federal Reserve interest rate decision, with the expectation of no change but increased focus on Chair Jerome Powell’s testimony. •   President Trump keeps putting pressure on the Fed for possible rate cuts, which shifts market mood. •  Recent Canadian PM Mark Carney press conference with US President Trump indicated positive negotiations, with more discussions to follow at the G7. •  US Trade Representative Greer and Treasury Secretary Bessent are sitting down with Chinese Vice Premier He Lifeng in Geneva in a breakthrough meeting of international trade tensions. •  Canada saw its business sentiment decline steeply in the April Ivey PMI. •  Gaining risk appetite across the world lifted the Canadian Dollar, even if global trade issues continue to put a strain on domestic concerns. Investors are keeping a close eye on events on several fronts as the USD/CAD currency pair stays flat in anticipation of major economic and political developments. The attention is mainly on the forthcoming Federal Reserve interest rate announcement, where markets expect nothing to change but remain sensitive to comments from Chair Jerome Powell, particularly against the backdrop of continuing trade tensions and political pressure from President Trump. These remarks are likely to offer hints on the Fed’s next policy course and how it will deal with inflation issues and world economic uncertainty. USD/CAD DAILY PRICE CHART CHART SOURCE: TradingView Aside from the Fed, the global trade dynamic is also largely influencing market sentiment. Top-level meetings are scheduled to be held in Geneva between US and Chinese officials as there are indications of easing trade tensions. In the meantime, US President Donald Trump and Canadian Prime Minister Mark Carney have engaged in renewed discussions on trade, providing guarded optimism. That said, Canada’s soft business activity readings, notably the recent Ivey PMI reading, challenge the momentum of the country’s economy, reflecting the delicate dance between forward progress externally and trouble internally. TECHNICAL ANALYSIS USD/CAD is proving resilient as it lingers close to the 1.3800 level,  a landmark psychological resistance area. A prolonged break over this level would indicate more bullish strength, even opening the doors to recent highs. On the bearish side, near-term support is currently at 1.3730–1.3750, where buyers had earlier stepped in. Traders will be awaiting a clear breakdown or rejection around 1.3800 in order to identify the next direction bias, considering that upcoming fundamental drivers such as the Fed decision will drive volatility in the markets. FORECAST USD/CAD pair breaks and holds above 1.3800 resistance level, it might reflect renewed bullish push, and have the possibility of testing higher levels of 1.3850 and possibly 1.3900 in short term. Such move may find support due to sustained demand for US Dollar with global uncertainty, dovish Fed tone, or soft Canadian economic indicators. Upside developments in US-China or US-Canada trade negotiations may also enhance investor sentiment in the USD, adding to the pair’s upward pressure. Conversely, inability to hold above 1.3800 may lead to a corrective pullback, with initial support at the 1.3750 region. A breakdown below this region may see further declines towards 1.3700 or even 1.3660 if risk appetite improves or Canadian data begins to show signs of recovery. Any dovish tone from the Fed or breakthroughs in trade talks that benefit the Canadian economy could also pressure the

Read More
Currencies

USD/CAD Strengthens Towards 1.3900 on Decreasing US-China Tensions and Dipping Oil Prices

  • BY
  • April 28, 2025
  • 0 Comments

USD/CAD currency pair is on the rise, reaching the 1.3900 level as decreasing US-China trade tensions increase demand for the US Dollar while declining crude oil prices drag on the Canadian Dollar. Hopes for better relations between the two economic giants have been fueled by China’s move to exempt some US goods from high tariffs, even as there have been conflicting official reports. Meanwhile, oil prices are falling further as a result of US-Iran nuclear talks making progress and rumors that OPEC+ will further raise output, putting the commodity-correlated CAD under pressure. With the Federal Reserve in blackout mode prior to its next policy decision, market attention continues to be on the geo-political events and energy market fundamentals. KEY LOOKOUTS • Any fresh remarks or actions pertaining to the tariff discussions could have implications for sentiment and USD strength. •  Oil weakness, particularly from US-Iran news or OPEC+ actions, could continue to keep the Canadian Dollar under selling pressure. •  The May 7 FOMC meeting will be closely monitored by markets for interest rate and economy direction signals. Canadian employment or inflation reports coming up could give the CAD guidance in the face of external pressures. USD/CAD are influenced by continuous progress in US-China trade relations, particularly any confirmation or rejection of tariff talks, which would influence investor sentiments and USD demand. Crude oil prices continue to be a key determinant of the Canadian Dollar, with risks to the downside emanating from expected OPEC+ production hikes and Iranian oil returning to world markets. In addition, investors are waiting for the forthcoming Federal Reserve policy meeting on May 7 to look for clues on interest rate direction, with Canadian economic reports like employment and inflation figures contributing to the near-term direction of the pair as well. Traders will be closely observing US-China trade headlines and crude oil price movements, both the main drivers for USD/CAD. Focus also shifts to the Fed meeting and Canadian economic releases for further guidance. • USD/CAD approaches 1.3900, posting gains for the second straight session. • Reducing US-China tensions boost the US Dollar after China temporarily exempts some US goods from tariffs. • Mixed signals emerge as Chinese officials refute reports of ongoing tariff talks. • DXY firm, trading close to 99.70, providing support to USD/CAD. • Fed is in blackout period before the May 7 FOMC meeting. •Declining oil prices weigh on the Canadian Dollar with US-Iran nuclear developments and OPEC+ output expectations. • Market attention turns to geopolitical developments, Fed policy cues, and future Canadian economic data. The USD/CAD currency pair continues to appreciate as market sentiment remains bullish on the US Dollar due to de-escalating tensions between the US and China. Optimism for better trade relations was rekindled following China’s move to exempt specific US imports from its high tariffs, which was seen as an indication of the possibility of thawing their months-long trade confrontation. Despite declarations by Chinese authorities that no talks are in process, the initial step has proved sufficient to give a boost to optimism regarding the prospects of world trade, helping the USD along the way. USD/CAD Daily Price Chart Source: TradingView At the same time, the Canadian Dollar is under pressure due to falling oil prices, which are closely tied to Canada’s economy. Crude prices have declined amid progress in US-Iran nuclear talks, raising the possibility of Iranian oil returning to global markets. Speculation that OPEC+ may increase oil output again has also added to the downward pressure. With the Federal Reserve in a period of silence before its policy meeting and uncertainty still surrounding trade and energy markets, USD/CAD is still sensitive to global news and commodity direction. TECHNICAL ANALYSIS USD/CAD is displaying bullish strength as it tests the important resistance level around 1.3900, boosted by two days of consecutive gains. The currency is trading above its short-term moving averages, reflecting strong purchasing interest, while momentum oscillators such as the RSI are still in neutral-to-bullish levels, reflecting scope for further appreciation before hitting overbought levels. A clean breakout above 1.3900 will potentially initiate a move towards the 1.3950–1.4000 range, while initial support is at 1.3800, which will possibly serve as a floor in the event of a correction. FORECAST If sentiment surrounding US-China relations remains strong and the US Dollar strengthens, USD/CAD can experience additional upside in the near future. Sustained trading above the 1.3900 level could draw additional bullish energy, with the pair moving towards 1.3950 or even 1.4000. Ongoing weakness in crude oil prices, especially if Iranian supply re-enters the market or OPEC+ increases production, will also continue to weigh on the Canadian Dollar, helping to propel the pair higher. But there are still downside risks if diplomatic optimism is lost or official comments persist in contradicting previous optimistic headlines and suppressing risk appetite and US Dollar bearishness. And any subsequent rebound in oil prices—on the back of supply disruptions or more robust global demand—may provide support to the Canadian Dollar and drag USD/CAD back down. Breaking through the support level of 1.3800 may initiate a more severe correction to 1.3740 or lower, particularly if future Canadian data surprises higher.

Read More
Currencies

Bank of Canada Takes a Pause, But Imminent Trade Risks Hint at More Cuts to Come

  • BY
  • April 17, 2025
  • 0 Comments

The Canadian Dollar advanced after the Bank of Canada (BoC) surprised the market by taking a pause from its rate-cutting cycle, keeping interest rates steady for the first time since it began easing last June. Although the move gave the CAD short-term relief, the BoC’s Monetary Policy Report emphasized continued trade tensions and economic uncertainties, hinting that the pause might be temporary. The central bank presented two scenarios: a mild slowdown if tariffs are relaxed, or a deep recession if trade disputes intensify. With rate cuts already partly reflected in markets, analysts expect further easing to come — perhaps as soon as June — once the direction of U.S. trade policy becomes clearer. KEY LOOKOUTS • The Bank of Canada’s hold on rates surprised some market expectations, providing near-term support to the Canadian Dollar, but the pause is widely regarded as temporary. • BoC policy perspective is extremely reactive to changing trade tensions, particularly U.S. tariff actions, which will significantly impact rate direction going forward. • Scenario 1 is premised on a smooth resolution of trade tensions with a transient dip in inflation, whereas Scenario 2 is predicting a deeper worldwide slowdown and Canadian recession should an all-out trade war materialize. •  The OIS market already has 50bps of rate cuts priced in, anticipating a softer economic landing, but a further rise in trade risks may provoke even lower cuts. The Bank of Canada’s pause in cutting interest rates has provided the Canadian Dollar with some short-term relief, but deeper-seated economic risks imply the respite is likely to be short-lived. The central bank identified two potential scenarios for the economy: one in which trade tensions gradually fade, enabling inflation to anchor around the 2% target, and another in which a protracted trade war unleashes a sharp slowdown and Canadian recession. Markets already expect additional cuts, perhaps as early as June, based on how U.S. trade policy develops over the next few months. Since the BoC is holding back, global trade direction will probably determine its next policy action. The Bank of Canada kept rates unchanged, providing a short-term lift to the Canadian Dollar. But with continued trade risks and economic uncertainty, rate cuts are likely to resume soon, with markets looking to June for the next likely move. The BoC’s outlook continues to be highly sensitive to U.S. trade policy evolution. •  The Bank of Canada (BoC) left interest rates unchanged, surprising the markets in its first rate pause since the rate easing cycle kicked off in June last year. •  The Canadian Dollar (CAD) picked up, growing 0.7% relative to the U.S. Dollar after the rate hold. •   The BoC identified prominent trade-related concerns and worldwide uncertainties in its Monetary Policy Report. •  Two scenarios were presented: one with trade tensions softening, and the other with a prolonged trade war that results in a Canadian recession. •   Inflation would fall to 1.5% in the less severe scenario but would temporarily rise to 3.0% if trade tensions intensify. •  The market is already discounting 50 basis points of rate cuts, potentially beginning as soon as June. • Governor Macklem indicated the BoC stands poised to act “decisively” should the situation deteriorate, hinting that the suspension might prove transitory. The Bank of Canada has opted to leave interest rates unchanged, exercising prudence as it observes how trade tensions abroad will pan out. The break is providing the central bank with extra time to evaluate the risks confronting the Canadian economy, particularly with lingering uncertainty regarding U.S. trade policy. The move reflects that although the bank is in no hurry to further cut rates, it is still worried about what’s ahead. EUR/USD DAILY PRICE CHART CHART SOURCE: TradingView With the rate decision, the Bank of Canada also released two potential future scenarios for the economy. One would prefer a resolution to trade tensions in peace, which would see the economy gradually slow down before resuming stable expansion. The other is that the economy could experience a deeper downturn if trade tensions persist, which might trigger a recession. The signal is unmistakable: while the bank has stopped short for the time being, it stands ready to act if necessary to backstop the economy. TECHNICAL ANALYSIS USD/CAD pierced below crucial levels of support after the Bank of Canada left rates unchanged, reaffirming bearish pressure in the near term. The pair fell below its 50-day moving average, indicating a change in sentiment against the Canadian Dollar. Momentum oscillators such as the Relative Strength Index (RSI) are also trending lower, indicating possibility of more downside if the pair cannot regain traction above 1.3700. Traders will be monitoring closely for a firm break beneath the 1.3600 area, which could pave the way for more severe declines, particularly should economic news or trade events enhance the CAD’s prospects in coming weeks. FORECAST If tensions in global trade relax and Canadian economic data begin to stabilize, the Canadian Dollar might be able to sustain its strength in the short term. Softening or abolition of U.S. tariffs would also boost market sentiment, enabling USD/CAD to bounce back above major resistance points like 1.3700. And if growth or inflation surprises to the upper side, the Bank of Canada might postpone further rate cuts, providing a further boost to the CAD. On the negative side, if trade tensions intensify or U.S. tariffs rise, the Canadian economy may experience a more severe slowdown, prompting the Bank of Canada to lower rates earlier and more forcefully than anticipated. This would tend to weaken the CAD, sending USD/CAD higher towards resistance levels. A more precipitous decline in global growth or weak domestic data would put further pressure on the currency, creating space for a move above 1.3800.

Read More