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USD/CAD Holds Firm Above 1.3850 as BoC Rate Cut Bets Rise and US CPI Data Looms

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  • September 11, 2025
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USD/CAD pair is holding steady near 1.3875 in early European trading on Thursday as investors weigh contrasting economic signals from the US and Canada. Rising expectations of a Bank of Canada rate cut, fueled by weak Canadian job data and a higher unemployment rate, continue to pressure the Loonie. In contrast, investors are preparing for the US August CPI report to be released, which is expected to reveal that inflation is ticking up. The result of this major data may well decide the pair’s short-term trajectory, with weaker inflation to limit the Greenback’s advance. KEY LOOKOUTS • Broadly expected 25 bps reduction in September, but chances of further relaxation in 2025. • August job losses of 66,000 and an unemployment rate of 7.1% put more pressure on the Canadian Dollar. • August CPI forecast at 2.9% YoY, with core CPI at 3.1%; any shock will influence USD momentum. • The pair remains strong above 1.3850, and buyers anticipate the next move after inflation release. USD/CAD holds firm above 1.3850 with investors eyeing near-term US inflation prints and increased Bank of Canada rate cut expectations. The Canadian Dollar is weakening following soft labor market data depicting job losses and rising unemployment, boosting the prospects of September policy relief. Conversely, the US Dollar remains firm as they anticipate the release of the August CPI data, with markets looking for inflation to creep higher. The outcome of the data will be critical in determining near-term direction of the pair, with weaker US inflation able to restrain the advance of the Greenback. USD/CAD trades firmly above 1.3850 as weak Canadian jobs data boosts expectations of a BoC rate cut. Investors now await the US CPI report, which could set the tone for the pair’s next move. • USD/CAD holds near 1.3875 in Thursday’s early European session. • Canadian Dollar pressured by weak labor market data showing 66,000 job losses in August. • Unemployment Rate jumps to 7.1%, making a BoC rate cut more likely. • A 25 bps BoC cut in September is priced by markets, with further easing in 2025 feasible. • US CPI inflation report today, with headline CPI at 2.9% YoY forecasted. • Core CPI forecast to stay at 3.1% YoY, the joint highest since February. • Inflation result focus in the market, with softer US CPI potentially limiting the gains of USD against the Loonie. The USD/CAD currency pair is in focus as market players consider two key variables: the policy direction of the Bank of Canada and the release of the US Consumer Price Index. Recent economic statistics from Canada were poor, including the shedding of 66,000 jobs in August and an increase in unemployment to 7.1%. This decline has made more likely the expectation that the Bank of Canada will proceed to make a rate cut in September, an action that most economists argue can be the start of a wider easing cycle in 2025. USD/CAD DAILY CHART PRICE SOURCE: TradingView Meanwhile, the US is gearing up for the release of its August CPI inflation data, a release that does a lot of heavy lifting for market mood. Expectations are for headline inflation to reach 2.9% year-on-year, with the core reading staying at 3.1%. Both of these readings will be closely watched by traders and policymakers, as they bring new information about the health of price pressures in the world’s biggest economy and inform Federal Reserve policy expectations. TECHNICAL ANALYSIS USD/CAD is holding firm above the 1.3850 level, an important level of support for the pair. Persistent strength over this region indicates buyers are still in charge, with the immediate resistance observed around the 1.3900 psychological level. A clean break above this barrier may lead to additional upside pressure. On the lower side, any breakdown below 1.3850 may initiate selling pressures, exposing subsequent support levels around 1.3820 and 1.3780. Traders will most probably wait for the US CPI result to validate the pair’s future directional bias. FORECAST Should US CPI figures be higher than anticipated, it can confirm bets on the Federal Reserve keeping the policy on a tighter leash for an extended period, thus strengthening the US Dollar. In such a case, USD/CAD can get some traction to take prices past the 1.3900 resistance into 1.3950 and beyond in the near future. On the other hand, if the inflation rates indicate a cooling down, the Greenback might lose pace as markets can speculate an imminent Fed rate reduction. This would ease the pressure on the Canadian Dollar and might take USD/CAD lower. A break below the 1.3850 support area may prompt further losses, with 1.3820 and 1.3780 being likely downside targets.

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Currencies

USD/CAD Increases to 1.3750 as Trade Tensions and BoC Outlook Survey Expectations Intensify

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  • July 21, 2025
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USD/CAD currency pair moves higher towards 1.3750 during early European morning hours on Monday, bolstered by persistent US-Canada trade tensions as well as market caution in anticipation of the Bank of Canada’s Business Outlook Survey. The Canadian Dollar has difficulty gaining traction as investors weigh the risks of a possible 35% US tariff on Canadian imports, although diplomatic negotiations spearheaded by Canadian Prime Minister Mark Carney provide some hope. In a supporting role, firm crude Oil prices, driven by new EU sanctions against Russian supply, offer a possible support base for the CAD, which helps to cap the upside on the USD/CAD pair. KEY LOOKOUTS • Markets look to the BoC report for new economic sentiment and policy direction. • Attention is on possible 35% tariffs and eleventh-hour negotiations among Canadian and US authorities. • CAD could be supported by WTI Oil remaining close to $66 in light of EU sanctions on Russian Oil. • Market restraint keeps the US Dollar bid, putting additional upside pressure on USD/CAD. The USD/CAD pair is getting into gear, moving towards the 1.3750 level as investors are grappling with increased trade tensions between Canada and the US. Market players are keeping an eye on events related to the imposition of 35% US tariffs on Canadian products, with last-minute diplomatic efforts in place to minimize further dislocation. In the meantime, the Canadian Dollar continues to be under selling pressure, but stable Oil prices are providing some respite. All attention is on the Bank of Canada Business Outlook Survey due out soon, which may give the pair further guidance in the North American session. USD/CAD rises close to 1.3750 as US-Canada trade tensions and investor apprehension increase. Traders wait for the Bank of Canada’s Business Outlook Survey for new economic signals, while bullish crude Oil prices provide little support to the Canadian Dollar. • USD/CAD hovers at 1.3750, having recovered from recent losses against a backdrop of caution in the markets. • US-Canada trade tensions grow more heated, with threats of a 35% tariff on Canadian imports. • Canadian PM Mark Carney sends a trade envoy to Washington for last-ditch talks. • BoC Business Outlook Survey due, which is likely to shed important light on economic sentiment. • Crude Oil prices stable, with WTI at $66, underpinning the commodity-linked CAD. • EU’s 18th round of Russia sanctions contributes to worldwide supply worries, helping Oil prices. • US Dollar is supported by safe-haven flows, placing the USD/CAD pair on a strong trend. The USD/CAD currency exchange rate is presently driven by increased political and economic events between Canada and the United States. With the US threatening a tariff of 35% on Canadian imports, relations between the two countries are strained. In a move to preempt this, Canadian Prime Minister Mark Carney has dispatched a trade envoy to Washington with the aim of securing a deal before the imminent August 1 deadline. The diplomatic initiative has kindled guarded hope in the markets, with investors monitoring closely for any sign of movement in the trade talks that may affect cross-border trade and investor mood. USD/CAD DAILY PRICE CHART SOURCE: TradingView Besides trade dynamics, commodity prices, especially crude Oil, are also providing support to the Canadian Dollar. West Texas Intermediate (WTI) Oil is steady near $66 per barrel, thanks mainly to new European Union sanctions on Russian exports. The sanctions cover diminished price caps and stricter constraints on Moscow’s energy earnings. The Canadian economy, highly integrated with the energy exports, would gain from sustained Oil price strength, even while general uncertainties influence market performance. TECHNICAL ANALYSIS USD/CAD is demonstrating bullish sentiment as it trades at the 1.3750 resistance level, trying to bounce from its recent decline. The pair remains above its short-term moving averages, indicating underlying strength. An extended break above 1.3750 might trigger the way toward the 1.3800 psychological mark, with near-term support resting around 1.3700. Momentum indicators like the RSI continue to register in neutral-to-positive ground, suggesting room for further upside if bearish pressure continues. FORECAST If the tensions in trade relax through effective Canada-US negotiations, and the Bank of Canada’s Business Outlook Survey indicates the resilience of the economy, USD/CAD can continue its upward trend. A continued break above the 1.3750 level could drive the pair to the 1.3800 level and further, particularly if the US Dollar continues to be supported by safe-haven flows and firm economic data. Additional advances will also materialize if Oil prices plateau or fall, lowering support for the Canadian Dollar. Conversely, lack of an agreement on a trade deal by the August 1 deadline or a dovish sentiment in the BoC survey might put pressure on the Canadian Dollar. Yet, any substantial increase in crude Oil prices due to global supply worries or geopolitical tensions would assist the CAD in bolstering strength. In such a situation, USD/CAD can fall back towards the 1.3700 mark of support, with even more bearish potential in case the momentum is reversed in favor of the Canadian Dollar.

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Currencies

USD/CAD Outlook: Loonie Set for Further Downside as Market Awaits Fed Policy and Trade Negotiations

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  • June 17, 2025
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USD/CAD remains pinned around 1.3575, indicating consolidation in anticipation of the much-expected Federal Reserve policy announcement. The market is widely expecting the Fed to leave interest rates at 4.25%-4.50% levels, thereby preventing any unusual market volatility. As for positive news on a prospective US-Canada trade agreement, the Canadian Dollar remains underperforming, with USD/CAD near its eight-month low. Bearish technical signals, such as falling EMAs and weak RSI, suggest possible downside towards the 1.3400 level, unless the pair can pull off a conclusive rebound above 1.3820. KEY LOOKOUTS • Markets watch out for the Fed interest rate statement, with a forecasted hold at 4.25%-4.50%, which can be relevant to USD volatility. • Hope of a trade deal between Trump and Carney can serve to back CAD if talks proceed as scheduled in the next 30 days. • A dip below 1.3540 might initiate further downfall towards 1.3500 and 1.3420, perpetuating the bearish trend. • 14-day RSI is still in bearish range (20-40), and all the major EMAs are in declining modes, indicating continuous selling pressure. USD/CAD currency pair stays bearish, trading at around 1.3575 as investors take a risk-off approach in the run-up to the Federal Reserve’s monetary policy statement. As much as a rate decision is expected to be held back, any indication of impending policy changes may inject some volatility into the US Dollar. Even as there is a favorable environment for the Canadian Dollar on account of a predicted trade agreement between Canada and the US, the Loonie remains underperforming. Technically, the bearish setup is still intact, and momentum gauges and EMAs suggest lower. A convincing fall below 1.3540 could set the stage for further losses towards 1.3500 and then 1.3420. USD/CAD fluctuates around 1.3575 as markets wait for the Fed rate decision. Even with trade deal euphoria, the Canadian Dollar lags. A fall below 1.3540 could lead to further losses toward 1.3400. • USD/CAD is trading around 1.3575, maintaining Monday’s range. • The Fed should keep interest rates at 4.25%-4.50%. • Investors are looking for policy cues from the Federal Reserve. • Canadian PM Carney and US President Trump target a trade agreement in 30 days. • Even with trade optimism, CAD trails other major currencies. • Technicals reveal a bearish pattern with all EMAs trending lower. • A decline below 1.3540 may send the pair to 1.3500 and 1.3420 support levels. The USD/CAD currency pair continues to be range-bound with market players looking ahead to the Federal Reserve interest rate decision later today. With general expectations of the Fed leaving its rate policy unchanged, investors are more interested in any forward guidance that would give clarity to future rate direction. This cautionary mood has seen the US Dollar firm up against its peers, including the Canadian Dollar, in advance of the mid-week policy declaration. USD/CAD DAILY PRICE CHART SOURCE: TradingView On the geopolitical side, events between Canada and the United States have captured the spotlight, including Canadian Prime Minister Mark Carney and US President Donald Trump’s commitment to seal a trade agreement within 30 days. Such an action would have significant consequences for North American trade patterns and investor sentiment. Even amid this seemingly rosy context for the Canadian economy, market responses have been muted as investors remain in wait for tangible advances on the trade horizon. TECHNICAL ANALYSIS USD/CAD remains bearish as the pair keeps trading below fundamental moving averages, with all short-to-long-term EMAs trending south—reflecting consistent selling pressure. The Relative Strength Index (RSI) continues to be weak, fluctuating between 20 and 40, reflecting that bearish momentum still prevails. A break below Monday’s low of 1.3540 would probably speed the downside movement, possibly pulling the pair towards the next important support levels of 1.3500 and 1.3420. Any rebound, though, above 1.3820 might change the near-term bias to bullish. FORECAST If USD/CAD penetrates the significant support at 1.3540, it might pave the way for more losses. The next strong psychological figure to monitor is 1.3500, with the September 25 low at 1.3420 coming next. Sustained bearish pressure, coupled with diminishing expectation of positive economic surprises in the US, may continue to fuel downward pressure in the near term. Conversely, a convincing bounce through the May 29 high of 1.3820 would confirm a reversal in sentiment and potentially turn the bearish structure of the pair around. This may set the stage for a test of the May 21 high at 1.3920 and ultimately the May 15 high at 1.4000, particularly if US economic conditions firm up or Fed commentary unexpectedly becomes hawkish.

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Currencies

USD/CAD Extends Losses with Crude Oil Strength and Dovish Fed Outlook

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  • May 22, 2025
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USD/CAD currency pair continues to trade with a bearish trend, extending losses for the fourth day in a row in response to bolstering crude oil prices and reduced prospects for a Bank of Canada rate reduction. The Canadian Dollar is supported by warmer-than-anticipated domestic inflation numbers, whereas the US Dollar continues to suffer due to dovish Federal Reserve hopes, fresh US-China trade tensions, and increasing fiscal worries after a US credit rating downgrade. Technically, a break below the critical 1.3900 support and rejection from the 200-day SMA further increase the bearish outlook, making the pair susceptible to greater losses in the near term. KEY LOOKOUTS • More robust than expected Canadian core inflation has taken some sting out of the chances of a near-future rate cut by the Bank of Canada, offering underlying support to the Loonie. • Being a commodity-linked currency, the Canadian Dollar is inextricably linked with oil prices. Any persistent rise in crude oil—under geopolitical tensions or supply issues—can further buoy the CAD. • Traders are waiting for forthcoming US macro data, such as flash PMIs, for signals on the Federal Reserve’s interest rate trajectory, with dovish sentiments keeping the USD under pressure. • The inability of the pair to remain above the 1.3900 level and rejection against the 200-day SMA indicate sustained bear pressure, with more falls to come should support at 1.3810 be broken. Traders should closely monitor key drivers influencing the USD/CAD pair, including the impact of elevated Canadian inflation on the Bank of Canada’s rate path, which currently tilts against a near-term rate cut and supports the Loonie. Crude oil prices remain a crucial factor, with recent gains driven by geopolitical uncertainty continuing to bolster the commodity-linked Canadian Dollar. In the meantime, the US Dollar remains under pressure from dovish expectations about the Federal Reserve and the issue of US fiscal stability, particularly after being downgraded by Moody’s credit rating. From a technical perspective, the pair’s inability to retake the 1.3900 level and its rejection of the 200-day SMA support a bearish direction, with traders on high alert for a possible break below the 1.3810 support area. USD/CAD is under pressure as increasing oil prices and higher Canadian inflation support the Loonie. Dovish Fed expectations and US fiscal worries weigh on the US Dollar, while a decline below 1.3810 could indicate further declines for the pair. •  USD/CAD is trading with a bearish bias, extending its losses for the fourth day running. •  Reversal in crude oil prices supports the Canadian Dollar owing to its commodity-linked nature. •  Higher-than-anticipated Canadian inflation lowers the prospect of a June cut by the Bank of Canada. •  US Dollar declines in line with dovish Federal Reserve hopes and increasing fiscal worries. •  US sovereign credit rating downgrade by Moody’s adds to pressure on the USD. •  Technical breakdown under 1.3900 and rejection from the 200-day SMA indicate sustained downside risk. •  Focus turns to US macro data due later in the day and global flash PMIs for new trading signals. The USD/CAD currency pair is still saddled by wider macroeconomic considerations affecting the US Dollar as well as the Canadian Dollar. On the Canadian front, recent inflation numbers were higher than anticipated, lowering the potential for an instant interest rate reduction by the Bank of Canada. This has bolstered faith in the Loonie, particularly when coupled with the recovery of crude oil prices, which are the backbone of Canada’s economy. Stronger oil prices, underpinned by geopolitical tensions like uncertainty over US-Iran nuclear talks, still provide support to the Canadian Dollar. USD/CAD DAILY PRICE CHART CHART SOURCE: TradingView On the American side, the Dollar is under constant pressure because of escalating fiscal worries and weakening expectations regarding upcoming interest rate increases by the Federal Reserve. Moody’s sovereign downgrade of the US credit rating and anxieties regarding swelling deficits have triggered caution among investors. Furthermore, tensions between the US and China have reemerged, also placing the USD under increased risk aversion, adding to the pressure on the currency. Market participants are now intently following future economic indicators, including US macro data and world flash PMIs, for clues that may affect the policy direction and investor appetite in the future. TECHNICAL ANALYSIS USD/CAD is still under pressure after it was unable to stay above the key 1.3900 level and was rejected close to the 200-day Simple Moving Average (SMA), indicating bearish momentum. The recent breakdown of the pair below a short-term consolidation area indicates a change in sentiment in the direction of sellers. If the support area of 1.3810–1.3800 is broken convincingly, it may pave the way for a further decline towards the next significant support levels. Momentum indicators also have a negative bias, supporting the possibility of further downside in the short term. FORECAST USD/CAD is able to remain above the 1.3800 support area and experiences fresh buying interest, a bounce towards the 1.3900 level may be in the pipeline. A move above this area would invite new bullish interest, with the potential to see the pair return to the 1.3950–1.3980 zone. To experience an ongoing upside drive, the pair would have to regain and stay above the 200-day SMA, currently serving as a major resistance. Positive surprises in future US economic data or a recovery in US Treasury yields would also be able to sustain a USD recovery, causing the pair to strengthen in the near term. Conversely, a strong break below the 1.3810–1.3800 support will likely lead to a deeper correction, exposing the next downside targets at 1.3750 and maybe 1.3700. Ongoing rigidity in crude oil prices and sustained cooling of US economic data would most likely continue to keep the Canadian Dollar underpinned, exerting pressure on the pair. Moreover, if the Federal Reserve continues to stick to its dovish stance and US fiscal worries remain, the bearish scenario could deepen, keeping USD/CAD susceptible to more losses during upcoming sessions.

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Currencies

USD/CAD Declines Below 1.3850 as Dollar Retreats Ahead of Highly Anticipated U.S. Jobs Report

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  • May 2, 2025
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USD/CAD pair fell below the 1.3850 level in Friday’s Asian session, trading around 1.3830, as the U.S. Dollar receded ahead of the highly anticipated Nonfarm Payrolls (NFP) report. Although the greenback had gained some strength recently, investor caution re-emerged with doubts about how current tariff measures are affecting job growth. Greater positive sentiment in the market, fueled by U.S. President Donald Trump’s positive comments on trade agreements with major Asian allies provided some relief to the USD. In contrast, softer-than-anticipated economic reports from both the U.S. and Canada—such as increasing U.S. unemployment claims and a third consecutive drop in Canada’s Manufacturing PMI—added to the conservative tone. The Bank of Canada’s recent meeting minutes also indicated a contained policy stance, dampening hopes of near-term rate reductions in spite of continued economic weakness. KEY LOOKOUTS • Market players are all eyes on Friday’s NFP reports for indications of how tariffs and trade tensions are impacting the U.S. labor market, and possibly impacting the direction of the USD. • Any breakthrough or delays in U.S. trade talks with China, India, Japan, and South Korea may determine market mood and USD strength. • While the BoC has kept rates steady in the face of sticky inflation and a robust labor market, future economic releases will be pivotal in determining future rate expectations. • Further softness in Canada’s manufacturing sector and other macro datapoints could bear down on the CAD, particularly if economic slowdown accelerates. USD/CAD pair are the following U.S. Nonfarm Payrolls report, which might offer vital information on the effects of tariffs on employment and shape Federal Reserve policy expectations. Market participants are also watching events on the trade front, as any improvement in U.S. negotiations with China, India, Japan, and South Korea might enhance risk appetite and underpin the U.S. Dollar. On the Canadian side, ongoing weakness in manufacturing—dramatized by April’s steep decline in the S&P Global Manufacturing PMI—may continue to stress the Canadian Dollar. Further, the Bank of Canada’s conservative policy tone, as embodied in its most recent meeting minutes, indicates that rate decisions will continue to be highly data-sensitive, so coming economic releases will be important for the CAD outlook. Traders are keeping a close eye on the U.S. Nonfarm Payrolls report for indications of the impact of tariffs on the labor market, which may alter USD sentiment. Poor Canadian manufacturing figures and the Bank of Canada’s conservative approach contribute to downside pressure on the CAD. Trade updates also continue to be a primary market driver. •  USD/CAD dipped below 1.3850, trading at around 1.3830 during Friday’s Asian session with a lull in the recent rally of the U.S. Dollar. • Investor attention is on the forthcoming U.S. Nonfarm Payrolls (NFP) release, which can provide insights on whether tariffs are impacting employment trends. • U.S. Initial Jobless Claims increased to 241,000, exceeding estimates and introducing caution to the economic outlook. • The U.S. ISM Manufacturing PMI fell to 48.7, still in contraction but better than predicted, providing mixed signals. •  Canada’s Manufacturing PMI dipped to 45.3 in April, lowest since May 2020, indicating ongoing sectoral weakness. • Bank of Canada left rates unchanged at 2.75%, due to sticky core inflation and a firming labor market, but left the door open for future rate cuts. • Optimistic market sentiment trailed following U.S. President Trump’s comments on the possibility of trade agreements with significant Asian economies, providing partial support to the USD. Investor sentiment in the USD/CAD cross is being influenced by a combination of economic data and geopolitical events. With the focus now shifting to the impending U.S. Nonfarm Payrolls report, markets are looking forward to gaining some insight into how existing trade policies, most notably tariffs, are potentially impacting employment and general economic activity. The latest comments from U.S. President Donald Trump hinting at possible trade deals with nations such as India, Japan, and South Korea have also alleviated some of the concerns related to trade. Moreover, news of China being willing to resume talks with the U.S. has also added to a slightly positive market sentiment. USD/CAD DAILY CHART PRICE CHART SOURCE: TradingView In Canada, economic data continues to reflect strain, especially in the manufacturing segment. S&P Global Manufacturing PMI declined for the third consecutive month in April to its weakest since the beginning of the pandemic. In spite of these conditions, the policy rate was left unchanged by the Bank of Canada due to entrenched core inflation as well as an unemployment market which proved surprisingly resistent. With both economies charting mixed data and shifting trade dynamics, market players are prudent, awaiting future economic releases and policy announcements for firmer guidance. TECHNICAL ANALYSIS USD/CAD has retreated after it failed to hold above the resistance 1.3850 level, hinting at a possible short-term consolidation. The duo is now trading around the 1.3830 level, with short-term support at 1.3800, a level that has served as a psychological floor in recent sessions. A breach below this support would pave the way towards 1.3750. On the higher side, a move above 1.3850 would be required to be sustained to restore bullish momentum, with the next resistance likely at 1.3900. Momentum tools like the RSI are turning lower, hinting at a possible continuation of range-bound behavior unless there is a robust catalyst. FORECAST Unless strong catalysts occur, like better-than-expected U.S. economic statistics on the next major releases, notably the Nonfarm Payrolls, this optimism in USD will fade and can potentially favor further downward moves to CAD. Strengthening trade sentiment, most likely should breakthroughs emerge on trade deals with China or other significant trading partners, might support positive momentum as well. Technically, a breakout above the 1.3850 resistance level could set the stage for the 1.3900–1.3950 range, particularly if risk appetite sours and investors flock to the safety of the USD. Conversely, however, if U.S. jobs data sends the wrong message or hints at slowing economic growth owing to tariff pressures, the USD could face fresh selling pressure. Dollar weakness would drag USD/CAD down,

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USD/CAD Falls Below 1.4100 Pre-US CPI Data Due to Weak Dollar and Pressure in Oil Market

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  • April 10, 2025
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The USD/CAD currency pair remains trading lower, falling below the 1.4100 level as the US Dollar continues to be under pressure prior to the eagerly awaited US Consumer Price Index (CPI) data for March. Anticipation of a modest dip in both headline and core inflation has cooled USD demand, with markets rethinking the chances of an imminent Fed rate cut. The Canadian Dollar also has its own headwinds as weakening oil prices—brought about by rising US-China trade tensions and renewed concerns about demand—bear down on the commodity-sensitive currency. Despite weakness in the USD, these countervailing forces are expected to cap the pair’s downside. KEY LOOKOUTS •  A softer-than-anticipated inflation figure may spur rumors of future Fed rate reductions, which could be a further drag on the US Dollar. •  As a significant Canadian export, falling crude prices due to worldwide demand worries and US-China trade tensions might cap CAD advances. •  Reaction to last week’s FOMC Meeting Minutes will continue to be pivotal, particularly about balancing inflation taming and economic slowdown. •  Any intensification of trade tensions might trigger risk-off sentiment, impacting oil prices and general currency market flows. The USD/CAD pair is down pressure below the 1.4100 level as investors wait for the US CPI inflation reading, which has the potential to influence expectations of upcoming Federal Reserve policy action. A lower inflation print would likely raise speculation on rate cuts, weakening the US Dollar further. But the Canadian Dollar is also coming under headwinds with declining oil prices amidst renewed concerns about demand triggered by rising US-China trade tensions. These counterforces—USD weakness against CAD vulnerability on sliding crude—are poised to create a tug-of-war in the pair’s direction, sustaining volatility in the near term. USD/CAD trades below 1.4100 as investors await key US CPI data, with expectations of a slight cooldown in inflation. While the US Dollar remains subdued, falling oil prices amid US-China trade tensions weigh on the Canadian Dollar, limiting further downside. • USD/CAD trades below 1.4100 for the second consecutive day amid US Dollar weakness. • March US CPI data are due, with inflation projected to slow to 2.6% from 2.8% in February. • Core CPI is predicted at 3%, down slightly from the last 3.1% reading. • FOMC minutes reveal concern over increasing inflation and decelerating growth, implying dovish Fed policy. • Market pricing indicates a 40% probability of a Fed rate cut next meeting, representing uncertainty. • WTI crude oil is close to $60.20, weighed down by demand concerns driven by US-China trade tensions. • Canadian Dollar is still susceptible to declining oil prices, topping gains against weakening USD. The USD/CAD currency pair is in the limelight as the market waits for the release of the US Consumer Price Index (CPI) data for March. This report is viewed closely because it gives information about inflation patterns within the United States, which greatly influence Federal Reserve actions. Mild cooling of inflation relative to the last month will be expected and may shape investors’ sentiments of future monetary policy actions. Concurrently, the latest Federal Open Market Committee (FOMC) minutes indicate that policymakers are closely walking a tightrope between inflation fears and risks of a decelerating economic growth. USD/CAD DAILY PRICE CHART CHART SOURCE: TradingView In addition, external pressures like global trade tensions are fueling market uncertainty. Fresh tensions between the US and China have renewed concerns about global demand, especially in the energy markets. Since oil is a crucial component of the Canadian economy, these events are being closely watched. The movement of crude oil prices and their reaction to overall economic signals will remain a key consideration for the Canadian Dollar. With both the US and Canadian economies having unique issues, market players are watchful in anticipation of any major economic releases. TECHNICAL ANALYSIS USD/CAD continues to exhibit signs of weakness as it continues below the psychological level of 1.4100. The currency pair has dipped below short-term support levels, reflecting a bearish near-term bias. Momentum indicators like the Relative Strength Index (RSI) indicate poor upside potential since they are resting close to neutral levels, and moving averages are beginning to tilt downwards, enhancing selling pressure. Should the pair be unable to hold its ground at or above 1.4100, however, it would begin to weaken to the next level of support around 1.4050, while a solid break higher at 1.4100 could set up the retesting of 1.4150 resistance. FORECAST In the event the US CPI for tomorrow surprises higher on the back of more solid-than-expected inflation, then the US Dollar will be pushed upwards by reinforcing the Fed’s hold-back from further interest rate cutting. A resurgence of USD strength could assist USD/CAD in rising back above the 1.4100 level, with possible levels of resistance at 1.4150 and 1.4200. Also, any indications of stability or rebound in oil prices would assist the Canadian Dollar, but if oil demand prospects are brightened by softening global tensions, the pair’s higher limit could be curtailed. Conversely, a weaker inflation print might revive hopes of Fed rate cuts, pulling the US Dollar down and further lowering USD/CAD. A fall below the current support at 1.4050 might result in a more pronounced pullback towards 1.4000 or even 1.3960. If oil prices remain low based on ongoing demand issues or lingering US-China trade tensions, the Canadian Dollar might depreciate even more, halting the descent of USD/CAD even if there is stress on the US Dollar.

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USD/CAD Struggles Near 1.4300 Amid Tariff Threats and Economic Concerns

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  • January 22, 2025
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The USD/CAD pair trades cautiously near 1.4300 amid heightened economic and political uncertainty. US President Donald Trump’s threat to impose a 25% tariff on Canada has dampened the Canadian economic outlook, prompting a strong response from Canadian Prime Minister Justin Trudeau, who stated that his government is ready to respond to any scenario. Additionally, expectations of a 25 bps rate cut by the Bank of Canada (BoC) following weaker-than-expected inflation data have further pressured the Canadian Dollar. In contrast, the US Federal Reserve is anticipated to hold interest rates steady, amplifying policy divergence. Technically, USD/CAD remains range-bound but shows a firm outlook, with potential for a rally above 1.4518 or a downside break below 1.4120. KEY LOOKOUTS • Follow US-Canada trade developments, as a 25% tariff from Trump will be huge for the Canadian economy and its dynamics in the USD/CAD market. • The upcoming decision of the BoC will likely be 25 bps, which might affect CAD sentiment and the broader economic forecast. • Resistances are seen at 1.4518 and support at 1.4120; it might act as a break out or breakdown point for considerable price action. • Maintain an eye on the fight between the Fed’s hawkish stance and the BoC’s dovish tone, which forms investor emotion and currency trends. USD/CAD now hovers around 1.4300 with market attention still on US-Canada trade wars and differing monetary policies. US President Donald Trump announced a 25% tariff over Canada, where he faces a stiff response from Canadian Prime Minister Justin Trudeau. The BoC has been touted to reduce interest rates by 25 basis points for its meeting, which is expected to follow the rather disappointing inflation data. In sharp contrast, the US Federal Reserve maintains a steady policy that further weighed in against the Canadian Dollar. Technically, this is a range-bound movement of USD/CAD with key levels such as 1.4518 and 1.4120, and any breakout will likely define the directional trend. USD/CAD trades circumspectly near 1.4300 amid US-Canada tariff tensions and expectations of a BoC rate cut. Diverging monetary policies and key technical levels at 1.4518 and 1.4120 remain critical. • Pair trades cautiously with economic and political uncertainties weighing down on market sentiments. • US President Donald Trump proposes a 25% tariff on Canada that raises concerns of economic impacts. • Prime Minister Justin Trudeau says he is prepared to act on any trade issues if tariffs are implemented. • The Bank of Canada is expected to reduce interest rates by 25 bps to 3% in its next policy meeting. • The CPI data for December showed a fall in annual inflation to 1.8%, which has been fueling dovish BoC bets. • The US Federal Reserve is likely to hold interest rates, which will widen the policy gap with the BoC. • USD/CAD is range-bound, with resistance at 1.4518 and support at 1.4120, setting critical breakout levels. The USD/CAD pair trades near 1.4300, reflecting market caution amid heightened economic and political uncertainties. US President Donald Trump’s threat of a 25% tariff on Canada has intensified concerns about the Canadian economy, with Prime Minister Justin Trudeau affirming readiness to counter any challenges. Additionally, expectations of a 25 bps rate cut by the Bank of Canada (BoC), driven by weaker December inflation data, have weighed on the Canadian Dollar. In contrast, the US Federal Reserve’s steady interest rate stance highlights the growing policy divergence between the two central banks. Technically, USD/CAD remains range-bound, with key levels at 1.4518 and 1.4120 likely to dictate the next significant move. USD/CAD Daily Price Chart. Source: TradingView Prepared By ELLYANA US Federal Reserve is expected to maintain its current interest rate policy, highlighting the growing policy divergence between the two economies. This divergence has boosted the appeal of the US Dollar against the Loonie. From a technical perspective, USD/CAD has been range-bound for over a month, trading within the 1.4260-1.4465 band. Key resistance at 1.4518 and support at 1.4120 are critical levels to watch, with a breakout likely signaling the pair’s next major directional move. Market participants remain focused on trade developments and upcoming monetary policy decisions, which could significantly impact the pair’s trajectory. TECHNICAL ANALYSIS From a technical perspective, USD/CAD has been trading in a tight range of 1.4260 to 1.4465 for over a month, reflecting market indecision. The 50-day Exponential Moving Average (EMA) slopes upward near 1.4235, signaling a bullish undertone despite the range-bound movement. Meanwhile, the 14-day Relative Strength Index (RSI) remains within the neutral 40-60 range, indicating a lack of clear momentum. A decisive break above the resistance at 1.4518 could pave the way for a rally toward the psychological level of 1.4600 and potentially the March 2020 high of 1.4668. Conversely, a downside break below the December 11 low of 1.4120 might lead to further weakness, targeting the December 4 high of 1.4080 and the key psychological support at 1.4000. Traders should watch these critical levels for confirmation of the next directional move. FORECAST USD/CAD shows potential for an upward breakout, supported by the 50-day EMA’s upward slope near 1.4235, which reflects a bullish bias. A sustained move above the immediate resistance level at 1.4518 could send the pair further north. A break above that level could then take the pair to round-level resistance at 1.4600 and the March 2020 high of 1.4668. The steady interest rate stance of the Federal Reserve and the vulnerability of Canada’s economy to trade tensions with the US further bolster the upside outlook. Positive momentum indicators and a possible rally in the US Dollar may push the pair to these higher levels. USD/CAD fails to hold above the 1.4260 level, it may come under downward pressure. A break below the December 11 low of 1.4120 may send the pair further down to the December 4 high of 1.4080 and the psychological support at 1.4000. Weak Canadian inflation data, coupled with expectations of a Bank of Canada rate cut, could weigh on the Canadian Dollar. However, a resolution of US-Canada trade tensions or stronger-than-expected

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