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USD/CAD Clings to Muted Levels Below 1.3950 as Complacent US Inflation and Trade Sentiment Command Market Mood

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  • May 14, 2025
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USD/CAD currency pair continues to hold low below the 1.3950 level, pressured by a softer US Dollar in the wake of lower-than-anticipated US CPI releases that has rekindled speculation of Federal Reserve rate cuts towards the end of the year. The US Dollar Index (DXY) has fallen to about 100.15, as geopolitical trade tensions introduce another degree of uncertainty, with Canada nudging to eliminate Trump-era tariffs before any talks with the US. On the other hand, declining oil prices, fueled by increasing US crude inventories, are exerting gentle pressure on the Canadian Dollar. Traders now wait for critical US economic data and statements from Fed Chair Powell for additional market guidance. KEY LOOKOUTS • Thursday’s release of April’s PPI, Retail Sales, and Initial Jobless Claims will be keenly observed for evidence of inflationary trends and consumer demand, shaping USD sentiment. • Market players will watch Fed Chair Jerome Powell’s speech closely for any clues on the upcoming interest rate path, especially with growing expectations of possible rate cuts. • Continued attempts by Canada to phase out Trump-era tariffs have the potential to influence future trade negotiations and influence CAD strength based on progress and US reactions. • As a large oil producer, Canada’s currency is still exposed to crude oil price moves; recent inventory numbers indicating growing US stockpiles potentially continue to put pressure on WTI prices and negatively affect the CAD. Markets are presently centered on some major events that may dictate the USD/CAD direction in the short term. High-impact US releases, such as April’s Producer Price Index (PPI), Retail Sales, and Initial Jobless Claims, will provide new insights into the condition of the US economy and inflationary pressures. Fed Chair Jerome Powell’s speech later this week is also under the limelight, with investors looking for clarity on the central bank’s policy stance as expectations of rate cuts grow. Geopolitically, Canada’s efforts to scrap Trump-era tariffs bring an element of uncertainty, which could impact future trade flows and the Canadian Dollar. Crude oil prices are also a key driver, with increasing US inventories bearing down on WTI and Markets are looking to important US economic data and Fed Chair Powell’s comments for direction on future rate action in the face of growing rate cut expectations. Trade tensions between the US and Canada, as well as declining oil prices, put additional pressure on the Canadian Dollar and USD/CAD forecast. •  USD/CAD is unchanged around 1.3950, trading below the 200-day EMA with ongoing pressure on the US Dollar. • Downside US CPI numbers have boosted the chances of rate cuts from the Fed, weakening the USD and taking the DXY down to near 100.15. • Fed Chair Jerome Powell’s speech today is eagerly awaited for any policy cues on the future interest rate trajectory. • Thursday’s US releases – PPI, Retail Sales, and Jobless Claims – may cause short-term USD/CAD volatility. • Canada’s efforts to end Trump-era tariffs have revived trade worries, further complicating the CAD. • WTI crude oil prices have fallen to $62.93, burdened by an unexpected build in US crude stocks, weakening the oil-correlated CAD. • Cautious sentiment in the market, with economic indicators and geopolitical tensions set to decide the next direction of the pair. USD/CAD currency pair is now driven by a combination of economic and geopolitical forces that are directing investor sentiment. Recent United States inflation numbers have rekindled debates surrounding the monetary policy of the Federal Reserve, with markets speculating that interest rate cuts may be back on the agenda this year. This change in expectations is affecting confidence in the US Dollar, making the tone for currency markets to be cautious. In the meantime, focus is also shifting to future US economic data releases and a planned speech by Federal Reserve Chairman Jerome Powell, both of which are likely to provide more insight into the direction of Fed policy. USD/CAD DAILY PRICE CHART CHART SOURCE: TradingView Geopolitically, trade relations between the United States and Canada are again in the spotlight. Canada has said that the priority in any renewed negotiations with the US would be to have tariffs imposed under the Trump administration repealed. The latest comes at a time when world trade patterns remain fragile, and any improvement or reversal in the talks could weigh on the larger Canadian economic picture. In addition, price volatility in oil continues to exert a backburner influence on the Canadian Dollar, as the nation is such a major exporter of crude. TECHNICAL ANALYSIS USD/CAD is having difficulty getting traction as it remains below the 200-day Exponential Moving Average (EMA), an important indicator which is commonly regarded as a long-term trend indicator. The fact that the pair has failed to breach above this level implies sustained bearish pressure, and buyers have hesitated in the 1.3950 resistance area. Momentum oscillators such as the Relative Strength Index (RSI) also point towards a neutral to mildly bearish bias, reflecting limited upside power. Unless the pair closes decisively above the 200-day EMA, the ongoing range-bound action is likely to continue, with levels around 1.3880 gaining prominence in case of fresh selling. FORECAST If future US economic statistics surprise to the upside—like higher-than-anticipated retail sales or producer price inflation—it may reactivate demand for the US Dollar, providing support to USD/CAD. A dovish-sounding Fed Chair Jerome Powell may also propel expectations of postponed rate cuts, perhaps sending the pair above the 1.3950 resistance. In this situation, a prolonged breach above the 200-day EMA may initiate further upside towards the psychological 1.4000 level and above, particularly if crude oil prices continue to be soft, softening the Canadian Dollar. On the other hand, in case of disappointing US data or if Powell hints at a dovish policy approach, interest rate cut hopes might gain strength, increasing pressure on the US Dollar once again. This may lead to a fall in USD/CAD, particularly if oil prices come back and buoy the Canadian Dollar. A fall below significant support levels near 1.3880 may cause the pair

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Currencies

USD/CAD Remains Flat Below 1.4350 On Fed Speculation and Canadian Politics

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  • March 24, 2025
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The USD/CAD currency pair begins the week cautiously trading just below the mid-1.4300s as conflicting market signals keep traders and investors nervous. While hopes of an eventual Fed rate cut dampen the US Dollar, lower Crude Oil prices and political instability in Canada—after Prime Minister Mark Carney demanded a snap election—cap the Canadian Dollar’s appreciation. In spite of intraday declines, the pair is still within last week’s range, indicating a lack of direction. With US PMI data and FOMC member speeches coming up, along with volatile oil prices, traders are waiting for new signals to decide the next direction in USD/CAD. KEY LOOKOUTS • Flash PMI prints and comments from prominent Federal Reserve members may steer short-term market sentiment and USD direction. • Short bets on an impending Fed rate-cut cycle are still a dominant force for USD movements and will keep influencing the trend in USD/CAD. • The surprise call for a snap election by Canadian Prime Minister Mark Carney injects uncertainty and could cap any sharp rise in the Canadian Dollar. • As a commodity-based currency, the CAD is still vulnerable to price movements in crude oil, so oil market fundamentals are an essential factor to monitor. Several factors affecting the USD/CAD in the short term need to be monitored closely by traders. Market interest will continue to be on US economic releases, specifically the flash PMI prints and Fed official speeches, which might provide new insights into the central bank’s monetary policy direction. Speculation over a possible Fed rate cut continues to pressure the US Dollar, while political tension in Canada after Prime Minister Mark Carney’s surprise election call might cap Canadian Dollar gains. Also, crude oil price volatility—considering CAD’s high correlation with oil—will be instrumental in determining the pair’s direction. Major areas of focus are future US PMI releases and FOMC speeches, which may influence USD sentiment. Speculation in the market regarding Fed rate cuts and Canada’s surprise election announcement may also impact USD/CAD movement. Also, oil price volatility is still important for the Loonie’s direction. • USD/CAD trades flat below the mid-1.4300s on mixed market signals. • Expectations of a Fed rate cut continue to bear down on the US Dollar. • Dovish Crude Oil prices constrain the Canadian Dollar’s rise. • Political risk increases with Canada’s PM announcing a snap election on April 28. • The market mood remains risk-averse with no definite directional bias. • The market waits for US flash PMI numbers and FOMC member speeches for new indications. • Price volatility in oil will continue to be a primary driver of USD/CAD direction. The USD/CAD pair is stable to start the new week, guided by a combination of economic and political events. Market participants closely monitor the situation unfolding in the US and Canada. On one side, the US Dollar is under pressure as there are growing hopes that the Federal Reserve might have rate cuts in the near term in view of economic slowdown concerns. On the other side, Canada’s political scenario has been given a fresh twist with Prime Minister Mark Carney declaring an unexpected election, raising doubts over future policy and investor sentiment towards the Canadian Dollar. USD/CAD Daily Price Chart Chart Source: TradingView Simultaneously, sentiment across broader markets is subdued as traders consider global economic indicators and geopolitical tensions. The Canadian Dollar, commonly sensitive to commodity prices, is also responding to oil price movements, which significantly determine its relative strength. In the near term, traders are likely to monitor closely the release of US economic data and speeches by Federal Reserve officials, which may provide more insight into the policy direction and its implications for currency movements. TECHNICAL ANALYSIS USD/CAD pair is range-bound, with prices staying just below the mid-1.4300s, indicating a lack of strong directional momentum. The pair has been able to bounce back from initial Asian session lows around 1.4325 but still trades in the wider range set last Friday. In spite of multiple attempts, the pair has failed to break convincingly above the 1.4400 resistance level, which suggests that buyers are reluctant without a definite bullish catalyst. On the negative side, support at the moment is around the 1.4300 level, and a persistent dip below this may draw in new selling interest. Until a break on either side happens, the pair will remain in this tight range, waiting for new impetus from economic news or political events. FORECAST Should market sentiment turn bullish for the US Dollar, perhaps in response to better-than-anticipated US economic news or more aggressive Federal Reserve rhetoric, USD/CAD may try to challenge the 1.4400 resistance level once again. A clear breakout above it may allow for additional upside, particularly if political uncertainty continues to pressure the Canadian Dollar. Also, if the price of oil continues to slide, it will add pressure to the Loonie, thereby supporting the trend in the USD/CAD to the upside. Conversely, in the event of Fed rate cut hopes gaining traction or if disappointing US data come out in the future, the US Dollar is likely to face fresh selling interest, causing USD/CAD to move lower. A drop below the 1.4300 support area may initiate additional weakness towards the 1.4260 or even 1.4200 levels. In addition, any improvement in Canada’s political scenario or a good bounce in crude oil prices might provide support to the Canadian Dollar, raising the risk of decline for the USD/CAD currency pair.

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Currencies

USD/CAD Remains Resilient Amid Trade Tensions and Political Uncertainty in Canada

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  • March 10, 2025
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The USD/CAD currency pair remains strong around the 1.4350 level, indicating an upside bias in the face of rising trade tensions and increasing political uncertainty in Canada. The Canadian Dollar is under pressure after China imposed a 100% tariff on major Canadian exports, escalating a wider trade war. In addition, speculation regarding an early federal election in Canada contributes to market uncertainty. While the US Dollar is being burdened with the fear of a possible economic downturn, increasing US Treasury yields provide some respite. With shifting global trade dynamics and unfolding political events, USD/CAD remains in focus for market players. KEY LOOKOUTS • China’s imposition of 100% tariff on Canadian exports can be a big burden for CAD, which could keep USD/CAD in bearish grip in the near future. • Increased speculation regarding an early federal election by PM Mark Carney could enhance volatility and investor risk aversion against the Canadian Dollar. • Albeit economic slowdown fears, increasing US Treasury yields could potentially cap downside pressure on the USD in the next few sessions. • Investors will be keenly observing how fresh US and China tariffs redefine North American trade flows and impact USD/CAD sentiment. The USD/CAD currency pair is charting a complicated course defined by increased trade tensions and political uncertainty. The Canadian Dollar is still on the back foot after China levied a 100% tariff on major Canadian exports, further heating up the ongoing trade war. Speculation surrounding an early federal election in Canada under Prime Minister Mark Carney further obscures the economic outlook. Simultaneously, the US Dollar is under pressure from fears of a possible slump in the US economy, although increasing Treasury yields are providing some support. As the world markets process these events, the USD/CAD pair remains steady around 1.4350, retaining its bullish bias. USD/CAD remains firm around 1.4350 as rising trade tensions and political instability in Canada counteract CAD weakness, while US economic worries limit Dollar strength. • USD/CAD is trading near 1.4350 with a bullish bias as global trade uncertainties and political instability in Canada keep the USD/CAD steady. • China slaps Canadian rapeseed oil, peas, and other goods with a 100% tariff, which fuels trade tensions. • Canadian Dollar is hampered by trade tensions against China and the US affecting investor morale. • Speculation intensifies over Canadian Prime Minister Mark Carney’s possible call for an early election in April or May 2025. • US Dollar softens slightly amid concerns of a US economy slowdown, capping bullish pressure. • Increasing US Treasury yields provide some support to the USD, albeit overall bearish pressure. • Markets remain vigilant in anticipation of the new tariffs effective on March 20, keeping a close eye on geopolitical and economic news. Trade tensions still hold center stage in the economic environment, particularly after China imposed a 100% tariff on a number of Canadian products such as rapeseed oil, peas, and pork. The action follows Canada’s previous tariff moves and has put more pressure on an already strained trade relationship. The move has put Canada’s trade prospects into question, with companies and investors responding to the possibility of affecting exports and the overall economy. These are among a wider global shift that is driven by protectionism, with nations reviewing their trade approach. USD/CAD Daily Price Chart Chart Source: TradingView With added uncertainty, political events in Canada have received more attention. There is speculation that Prime Minister Mark Carney will call an early federal election, potentially late April or early May, ahead of the scheduled October 2025 date. Such political maneuvers would carry high stakes for policy direction and investor sentiment. Conversely, there are also fears emerging about the prospects of the US economy’s growth, even though the economic fundamentals remain under close observation. Against this backdrop, market participants are closely monitoring both trade policies and political actions that may influence the economic environment over the next few months. TECHNICAL ANALYSIS  USD/CAD is showing a robust consolidation trend around the 1.4350–1.4360 level, which reflects a possible accumulation phase. The pair has sustained its bullish setup following recent advances, indicating that buyers remain dominant. Major support is seen at 1.4300, whereas near-term resistance is placed close to the 1.4400 level. A follow-through above this resistance may invite further upside strength, whereas a fall below support may herald a short-term setback. Overall, the pair’s consistent placement close to current highs indicates underlying interest in buying amidst current market uncertainties. FORECAST If trade tensions increasingly become more bearish on the Canadian Dollar, USD/CAD may further extend its climb in the future sessions. Breaking above the resistance level of 1.4400 can bring renewed bullish force, and this may push the pair to test higher levels. Moreover, even the slightest news of political turmoil in Canada, such as an announcement of holding an early election, can support further USD strength against the CAD. Rising US Treasury yields would also offer a basis for sustained upper bias in the pair. Conversely, if diplomatic talks between Canada and her trading partners signal ebbing tensions, the Canadian Dollar may gain stature, piling pressure on USD/CAD downwards. Further, if future US economic numbers indicate a more severe-than-anticipated slowdown, this may detract from investor morale in the US Dollar. A fall below the 1.4300 support level may initiate a corrective move towards lower levels, particularly if global sentiment turns risk-on or oil prices rise, which generally benefits the CAD.

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