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USD/CAD Grapples With Lows Under Weight of Bearish USD Sentiment and Higher Oil Prices

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  • March 17, 2025
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The USD/CAD currency pair continues to see downward pressure, trading at the lower end of its near-term trading range as bearish US Dollar sentiment and higher crude oil prices keep the pair on the back foot. A bull spike in oil due to Red Sea geopolitical tensions and tighter Canadian fundamentals is providing some support to the commodity-linked Loonie. Meanwhile, growing expectations of multiple Fed rate cuts in 2025, coupled with soft US inflation data and a cooling labor market, keep the US Dollar subdued. Traders now await key US economic data and the outcome of the upcoming FOMC policy meeting for clearer directional cues. KEY LOOKOUTS • Markets await the outcome of the FOMC meeting, which could offer fresh clues on future interest rate path and USD direction. • Future US economic statistics such as Retail Sales and Empire State Manufacturing Index can shape short-term USD/CAD direction and sentiment. • Further escalation of Middle East tensions would further push oil prices up, supporting the Canadian Dollar and putting downward pressure on USD/CAD. • Bullish news from recent US-Canada trade negotiations can continue to support the Loonie, keeping upside in the USD/CAD pair in check. Traders are keenly interested in important economic and geopolitical events that may dictate the USD/CAD pair in the near future. The impending FOMC policy meeting is crucial in its importance, with a potential to provide new information on the Federal Reserve’s rate-cut path as US inflation and labor indicators weaken. US Retail Sales and Empire State Manufacturing Index would also be awaited for short-term trading signals. Conversely, increasing crude oil prices, driven by growing tensions at the Red Sea, remain to underpin the commodity-related Canadian Dollar. Additionally, sentiment from recent US-Canada trade talks that was optimistic in nature may keep the Loonie strong and limit any significant appreciation of the USD/CAD pair. USD/CAD is under pressure at the lower end of its range due to a weak US Dollar and higher crude oil prices. Traders are waiting for important US data and the FOMC policy decision for new direction. Favorable US-Canada trade sentiment also favors the Loonie. • USD/CAD stays firm around mid-1.4300s, unable to bounce back due to overall bearish sentiment against the US Dollar. • Crude oil prices jump to a two-week high, propping up the Canadian Dollar on account of its commodity-linked nature. • Geopolitical tensions in the Red Sea drive oil price spikes, bolstering the Loonie and capping USD/CAD upside. • Market expectations of several Fed rate cuts in 2025 weigh heavily on the US Dollar’s strength. • Soft US inflation and moderating labor market numbers reaffirm hopes for dovish Federal Reserve policy. • Positive news recently in US-Canada trade negotiations further encourages investor sentiment in the Canadian Dollar. • Sellers look to later US Retail Sales, Empire State Index, and FOMC meeting for new directional signals in the USD/CAD. The USD/CAD currency pair is currently driven by the larger economic and geopolitical forces dictating the world financial environment. One of the major drivers is the increasing prices of crude oil, which have a direct positive impact on the Canadian economy given its position as a significant oil exporter. The recent increase in oil prices, driven by increased tensions in the Red Sea, has made the Canadian Dollar stronger. Moreover, the positive news from the last US-Canada trade talks has provided a good support for the Loonie, and market sentiment has been enhanced with renewed faith in Canada’s economic prospects. USD/CAD Daily Price Chart Chart Source: TradingView Conversely, the US Dollar is being pressed as expectations grow for the Federal Reserve to take a dovish approach in the following months. Weaker inflation data, slowing signs in the labor market, and expectations for two interest cuts by 2025 have all fed into the weakening USD prognosis. Additionally, renewed fears that the US trade policy will somehow impact the American economy have put even more hesitation. As the traders look forward, the future US economic releases and the policy decisions of the Federal Reserve will have a significant role to play in determining the bigger picture for both currencies. TECHNICAL ANALYSIS USD/CAD currency pair is consolidating in the vicinity of the lower side of its short-term trading band, reflecting a risk-averse market mood. The 1.4350 level is being used as an important support zone, and an unambiguous breach below here can lead the way for more selling. To the upside, recovery efforts will confront resistance at about the mid-1.4400s where selling can get re-instated. The duo’s failure to hold on to a firm upward push is a reflection of the underlying bearish sentiment, with traders still watching price action closely for possible breakout or breakdown cues in the sessions ahead. FORECAST If the USD is able to recover its strength, fueled by better-than-anticipated economic reports or a less dovish Federal Reserve in the next FOMC meeting, USD/CAD may try to recover. A move above the near-term resistance around the mid-1.4400s may fuel further upside action, possibly drawing in new buying interest. If that happens, the pair may target higher levels in the near term, particularly if oil prices stabilize or decline modestly. Conversely, if bearish pressure against the US Dollar persists as more rate cuts and dismal economic indicators are anticipated, USD/CAD could fall further. If the price goes below the 1.4350 support level for an extended period, selling momentum could be triggered once more, directing the pair lower towards further support levels. Moreover, if oil prices keep rising due to geopolitical tensions, the Canadian Dollar might gain further, which could hasten the downside risk for USD/CAD.

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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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Currencies

USD/CAD Recover from One-Week Low as Key US and Canadian Jobs Report Looms

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  • March 7, 2025
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The USD/CAD pair recovers from a one-week low, restoring the 1.4300 level as downward bearish Crude Oil prices pressure the Canadian Dollar (CAD) as major employment reports loom from the US and Canada. This is the pair’s first positive action in three days, spurred by repositioning trades and market expectations of the US Nonfarm Payrolls (NFP) release. Nevertheless, a persistent US Dollar (USD) selling bias, spurred by Trump trade tariffs concerns and expected Federal Reserve (Fed) rate cuts, restricts further rallies. In turn, Trump’s short-term tariff reprieves for Canada and Mexico alleviate trade tensions, possibly supporting the CAD and capping USD/CAD’s upside. Traders now await job data releases for clearer directional cues. KEY LOOKOUTS • The pair recovers above 1.4300, snapping a three-day losing streak as traders reposition ahead of key US and Canadian employment data. • Bearish crude oil prices weaken the Canadian Dollar, acting as a tailwind for USD/CAD, but potential BoC policy decisions could cap gains. • Ongoing USD selling, fueled by fears of Trump’s trade tariffs and potential Fed rate cuts, keeps the pair’s bullish momentum in check. • The US Nonfarm Payrolls and Canada’s employment report will be major drivers, dictating the near-term price action and investor sentiment in USD/CAD. The USD/CAD pair recovers from a one-week low, rising back above 1.4300, as the market players reposition prior to the US Nonfarm Payrolls (NFP) data and Canada’s employment numbers. Poor Crude Oil prices are still depressing the Canadian Dollar (CAD), supporting the pair slightly, but the hopes that the Bank of Canada (BoC) will soon halt rate cuts could cap the pair’s upside. At the same time, a persistent US Dollar (USD) selling bias, driven by Trump’s trade tariffs and uncertainty regarding possible Federal Reserve (Fed) rate reductions, contributes to the uncertainty. With market actors waiting for new employment statistics, the short-term prospects for USD/CAD continue to be reliant on economic releases and general risk sentiment. The USD/CAD currency pair bounces higher around 1.4300 due to poor Crude Oil prices and repositioning for major US and Canadian jobs data. Yet, the USD selling bias due to Trump’s trade policy and possible Fed rate cuts might cap higher gains. Sellers now look to NFP and Canada’s employment report for more direction. • USD/CAD rallies from a week low, ending a three-day losing streak due to market repositioning. • Bearish crude oil prices weigh on the Canadian Dollar, aiding USD/CAD’s upside. • Fears of Trump’s trade tariffs and possible Fed rate cuts constrain the US Dollar’s strength. • Speculation that the Bank of Canada might leave rates unchanged might cap USD/CAD’s advances. • Traders wait for the NFP report, which will be important in forming USD price action. • Canadian employment numbers will offer additional guidance for the pair’s direction. • Trump’s exemption of Canadian and Mexican imports from tariffs for one month mitigates fears of trade wars, weakly bolstering the CAD. The USD/CAD pair continues to be under spotlight as the release of US and Canadian employment reports is awaited by traders with anticipation. The releases will offer major indications of both economies’ health and might sway monetary policy moves in the future. Market participants are also intently observing the global economic landscape, especially economic policies and trade relations, which have a significant influence on the sentiment of investors. With evolving trade agreements and central banks monitoring economic stability, traders are aligning themselves depending on possible changes in policy and economic outlook. USD/CAD Daily Price Chart Chart Source: TradingView Another significant determinant of market sentiment is the effect of crude oil prices on the Canadian economy. Being an oil-exporting country, Canada’s economic performance is directly related to the movement in oil demand and supply. Furthermore, recent trade policy developments, such as temporary tariff relief on Canadian and Mexican products, are being watched for their long-term effects on trade relations and economic growth. As investors wait for major employment figures, sentiment is still cautious, and future direction will be based on general economic data and geopolitical events. TECHNICAL ANALYSIS USD/CAD pair has rebounded from a one-and-a-half-week low around the 1.4240-1.4235 area, retaking the 1.4300 level. This bounce indicates a possible short-term support area around 1.4240, and the 1.4350-1.4380 area could be the next resistance point. Despite this, the pair is still at risk of negative moves in a persistent bear trend in the US Dollar (USD). Should bearish selling intensify, breaking below 1.4240 may pave the way for continued losses to 1.4200 or worse. Meanwhile, momentum oscillators such as the Relative Strength Index (RSI) and Moving Averages provide a neutral to slightly bearish inclination, with market participants holding out for vital employment releases to confirm directional themes. FORECAST If the US employment figures beat expectations and favor the US Dollar (USD), the USD/CAD pair may pick up more steam. A move above the 1.4350 resistance level can take the pair to the 1.4380-1.4400 region, where more bullish momentum can be initiated. Additionally, if crude oil prices keep falling, the Canadian Dollar (CAD) can weaken, further favoring an up move in USD/CAD. A hawkish policy from the Federal Reserve (Fed) or rising market risk aversion would also propel the pair higher as investors turn to safe-haven assets. Conversely, softer US job data or economic slowdown signals would trigger a fresh USD sell-off, sending USD/CAD back towards the 1.4240 support area. Should this level be broken, the next key support is around 1.4200, which would leave the door open for further declines. Also, if the Bank of Canada (BoC) is to indicate a more stable or hawkish monetary policy, this might make the CAD stronger, capping gains for USD/CAD. Reversal of crude oil price also might lend some support to the Canadian Dollar, making it more likely that the pair could drop.

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