empty
17.12.2024 03:12 PM
USD/CAD. Analysis and Forecast

This image is no longer relevant

For the fourth consecutive day, the USD/CAD pair continues to attract buyers, retesting its highest level since April 2020 around the 1.4280 zone.

This upward movement is driven by a combination of factors:

  • Political Shock in Canada: On Monday, Canada experienced a surprising political event when Chrystia Freeland, Deputy Prime Minister and Finance Minister, resigned due to disagreements with Prime Minister Justin Trudeau over economic strategy and the threat of US tariffs.
  • Bank of Canada Policy: The aggressive easing policy of the Bank of Canada and its dovish outlook regarding slower growth in the final quarter of this year further undermine the Canadian dollar.
  • US Dollar Strength: The renewed buying interest in the US dollar, supported by expectations of a less dovish Federal Reserve and rising US Treasury yields, has provided additional support to the pair.

Investors are now convinced that the Federal Reserve will adopt a more cautious stance on rate cuts, especially as Monday's US macroeconomic data revealed that much of the economy grew at its fastest pace in three years. Speculation that Donald Trump's policies may lead to higher inflation and increased government borrowing pushed the yield on 10-year US government bonds to its highest level since November 22. Additionally, ongoing geopolitical tensions and fears of a renewed trade war add support for the safe-haven US dollar.

This image is no longer relevant

Concerns about supply disruptions—driven by stricter sanctions against Iran and Russia—may help crude oil prices recover positive momentum. However, this is unlikely to provide significant support to the commodity-linked Canadian dollar in the near term.

Traders are advised to remain cautious and refrain from opening aggressive positions ahead of the release of Canada's latest consumer inflation data later today. Furthermore, monthly US retail sales data could provide short-term momentum at the start of the North American session. However, the primary focus will be on the outcome of the highly anticipated two-day FOMC meeting on monetary policy concluding on Wednesday. Investors will be looking for new signals regarding the path of Fed rate cuts, which will drive demand for the US dollar and determine the short-term trajectory of the USD/CAD pair.

Technical Outlook

On the technical front, the Relative Strength Index (RSI) on the daily chart has entered overbought territory, which calls for some caution for the bulls.

  • Upward Levels: Any further upward movement will likely face strong resistance near the April 2020 high, around the psychological level of 1.4300.
  • A sustained move above this level could push USD/CAD toward the next significant hurdle at 1.4350, with bulls aiming to reclaim the 1.4400 round figure for the first time since March 2020.

This image is no longer relevant

  • Downward Levels: On the other hand, any corrective pullback will find solid support near the 1.4200 round level.
    • Further decline may present a buying opportunity around the 1.4155–1.4150 level, which could limit losses.
    • A decisive break below this support would expose the 1.4100 level, which serves as a strong short-term base.
      • A breakdown below 1.4100 would trigger a prolonged bearish phase, paving the way for deeper losses.

In conclusion, while the pair remains bullish, caution is warranted near multi-year highs, and traders should monitor key data releases and the FOMC outcome closely.

This image is no longer relevant

Irina Yanina,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

USD/JPY. Analysis and Forecast

At the start of the week, following the release of a weaker Japanese PMI, the yen came under pressure. This, combined with news of narrower and less aggressive retaliatory tariffs

Irina Yanina 13:20 2025-03-24 UTC+2

XAU/USD. Analysis and Forecast

Today, gold prices remain low but are holding above the psychological level of $3000, which serves as an important support. News that emerged over the weekend indicates that U.S. President

Irina Yanina 10:25 2025-03-24 UTC+2

The Market Fell Into a Pit It Dug for Others

What drives the markets? Fear? Greed? At the moment, disappointment is far more significant. Investors are realizing that Donald Trump's tariff policy will not lead to anything good

Marek Petkovich 09:23 2025-03-24 UTC+2

Markets Are Tired of Falling. Investors Look for Growth Triggers (CFD contracts on #SPX and #NDX futures may rise on positive U.S. economic data)

Global financial markets continue to swing back and forth amid uncertainty over the actual impact on the economies of various countries targeted by Donald Trump's tariff hikes, which have prompted

Pati Gani 09:23 2025-03-24 UTC+2

EUR/USD Weekly Preview: PMI and IFO Indices, U.S. GDP, and Core PCE Index

The upcoming week's economic calendar is packed with important fundamental events. Macroeconomic reports will either help EUR/USD sellers consolidate within the 1.07 range or enable buyers to hold above

Irina Manzenko 06:52 2025-03-24 UTC+2

What to Pay Attention to on March 24? A Breakdown of Fundamental Events for Beginners

Eight macroeconomic events are scheduled for Monday. Preliminary March readings of business activity indices in the manufacturing and services sectors will be published in Germany, the Eurozone, the U.S

Paolo Greco 06:08 2025-03-24 UTC+2

USD/JPY. Analysis and Forecast

Today, following the release of data showing a February slowdown in the national Consumer Price Index (CPI), the Japanese yen continues to trade with a negative tone, creating uncertainty

Irina Yanina 11:07 2025-03-21 UTC+2

US stock market getting ready for zero hour

The Federal Reserve has done all it can to calm the markets, but in 2025, the spotlight has shifted away from the central bank. The S&P 500 has brushed

Marek Petkovich 09:20 2025-03-21 UTC+2

What to Pay Attention to on March 21? A Breakdown of Fundamental Events for Beginners

There are no scheduled macroeconomic events for Friday. The euro and the pound have finally declined against the U.S. dollar. The Federal Reserve has done its part to calm

Paolo Greco 06:06 2025-03-21 UTC+2

GBP/USD Pair Overview – March 21: The Bank of England Had No Impact on the Current Situation

The GBP/USD currency pair traded very calmly on Thursday, as on Wednesday evening. As the chart below clearly shows, volatility has recently dropped to noticeably low levels. What

Paolo Greco 04:16 2025-03-21 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.