empty
13.12.2024 01:26 PM
USD/CAD: Analysis and Forecast

This image is no longer relevant

Today, the USD/CAD pair has reached a new multi-year high last seen in April 2020. The Canadian dollar continues to face pressure due to the Bank of Canada's aggressive monetary easing and dovish outlook. Previously, the Bank of Canada reduced its key interest rate by 50 basis points for the second consecutive meeting, citing slower-than-expected growth in the final quarter of the year. Additionally, the bank noted that potential new tariffs on Canadian exports to the U.S. have added uncertainty to economic prospects. Alongside this, bullish sentiment for the U.S. dollar is acting as a tailwind for the currency pair.

According to the U.S. Bureau of Labor Statistics yesterday, the Producer Price Index (PPI) rose by 0.4% in November, with the annual rate accelerating from 2.6% to 3%. Furthermore, the annual core PPI reached 3.4% year-over-year, surpassing all estimates. Combined with the Consumer Price Index (CPI) released on Wednesday, this suggests that progress in reducing inflation toward the Federal Reserve's 2% target has stalled. Additionally, expectations that the Federal Reserve will take a cautious stance on rate cuts, partly due to U.S. fiscal policies under President Trump potentially driving inflation, continue to support higher yields on U.S. Treasury bonds, pushing the U.S. dollar to a new monthly high.

This image is no longer relevant

However, dollar bulls are hesitant to open new positions ahead of the highly anticipated FOMC monetary policy meeting, which begins next Tuesday and concludes on Wednesday with a rate decision. Investors will be looking for guidance on the Fed's path to rate cuts, which could influence the short-term price dynamics of the U.S. dollar and provide fresh momentum for the USD/CAD pair.

This image is no longer relevant

Meanwhile, modest gains in crude oil prices could offer some support to the Canadian dollar, potentially limiting further upward movement for the pair.

Nonetheless, spot prices remain on track for a third consecutive week of gains, extending a nearly three-month uptrend amid a supportive fundamental backdrop.

A break and close above the 1.4200 psychological level is seen as a new trigger for bulls. However, the Relative Strength Index (RSI) on the daily chart has entered the overbought zone. Thus, it would be prudent to wait for a short-term consolidation or a moderate pullback before initiating new long positions. Any significant corrective decline is likely to find strong support around 1.4155, followed by 1.4120, the psychological 1.4100 level, and the weekly low near 1.4090. A breach of the weekly low could trigger extended corrective trading and open the door for deeper losses.

Despite this, the constructive setup for USD/CAD supports a move toward testing the April 2020 swing high near 1.4300. A subsequent move higher could target the next significant resistance near 1.4350, above which bulls might aim for a reclaim of the 1.4400 psychological level.

This image is no longer relevant

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

WTI Gains Support from Rising Geopolitical Tensions in the Middle East

For the third consecutive day, West Texas Intermediate (WTI) crude oil is attracting buyers. Currently, the commodity is trading slightly above the key psychological level of $68.00, having gained over

Irina Yanina 18:24 2025-03-18 UTC+2

USD/JPY. Analysis and Forecast

Today, the Japanese yen continues to decline intraday, pushing USD/JPY close to the key psychological level of 150.00, with the pair setting a new two-day high around 149.87. Global market

Irina Yanina 18:21 2025-03-18 UTC+2

Market catches fish in muddy water

Chaos in the White House's economic policy has pushed the S&P 500 to the brink. The broad stock index briefly entered correction territory before rebounding with two consecutive days

Marek Petkovich 11:18 2025-03-18 UTC+2

Positive Data from China and Rising Risk Appetite Support a Bullish Outlook for the Kiwi – NZD/USD Analysis

The New Zealand dollar (NZD) has gained another strong bullish factor as the ANX Commodity Price Index recorded another solid increase in February, rising 3.0% month-on-month (m/m) and 14% year-on-year

Kuvat Raharjo 10:36 2025-03-18 UTC+2

No Major Surprises Expected from the Fed Meeting (Anticipating a Sharp Drop in EUR/USD and Continued Cautious Gold Price Growth)

Markets are experiencing turmoil due to the risk of a U.S. economic recession. Although Treasury Secretary Bessent attempts to reassure investors by calling the market "correction" a healthy process, these

Pati Gani 08:48 2025-03-18 UTC+2

What to Pay Attention to on March 18? A Breakdown of Fundamental Events for Beginners

A large number of macroeconomic events are scheduled for Tuesday, but none of them are significant. For example, the Eurozone and Germany will publish ZEW economic sentiment indices, which

Paolo Greco 06:08 2025-03-18 UTC+2

GBP/USD Pair Overview – March 18: The Pound Persistently Climbs Upward

On Monday, the GBP/USD currency pair continued to lean toward growth. There were no significant events in the UK throughout the day, while in the U.S., only one report

Paolo Greco 04:04 2025-03-18 UTC+2

EUR/USD Pair Overview – March 18: The Break is Over

The EUR/USD currency pair has resumed its upward movement. Since there was very little news on this day, and none of it was significant, volatility remained quite low, preventing

Paolo Greco 04:04 2025-03-18 UTC+2

USD/JPY: Analysis and Forecast

The Japanese yen continues to be on the defensive against the U.S. dollar, as global risk sentiment improves following new stimulus measures announced by China over the weekend. This

Irina Yanina 11:35 2025-03-17 UTC+2

USD/CAD: The Pair Starts the New Week with Caution

The USD/CAD pair begins the new week with caution, fluctuating within a narrow range above 1.4350 and remaining above the 50-day SMA. However, fundamental factors suggest potential downside risks. Positive

Irina Yanina 11:05 2025-03-17 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.