Technical Analysis

USD/CAD Price Analysis – Dec 24, 2024

By LonghornFX Technical Analysis
Dec 24, 2024
Usdcad

Daily Price Outlook

During the European trading session on Tuesday, the USD/CAD pair saw some upward movement, climbing to an intraday high of 1.4400 after starting around 1.4396.

This increase can mainly be traced back to the US dollar, which gained momentum following comments from Federal Reserve policymakers suggesting fewer interest rate cuts next year due to a slowdown in disinflation.

However, the situation isn't all straightforward. Soft US PCE data have eased some of the inflation concerns, leaving a mixed outlook for the economy.

On the other hand, Canada’s economy showed stronger-than-expected GDP growth, while the Raw Material Price Index unexpectedly dropped, which could lend some support to the Canadian dollar. This positive economic data might help the CAD, potentially leading to a weaker USD/CAD pair in the short term.

US Economic Data and Consumer Confidence Point to Mixed Outlook for the Economy

On the US front, the broad-based US dollar saw support as Federal Reserve officials suggested there might be fewer interest rate cuts next year. This was due to a slowdown in the disinflation process, which keeps inflation concerns lingering.

Hon for October, which showed a 0.8% increase, much higher than the initial 0.2% reported. This data reflects some challenges in the US economy and could affect future economic expectations.

Meanwhile, consumer confidence also took a hit. The US Consumer Confidence Index fell by 8.1 points in December, dropping to 104.7. This decline shows that the recent rise in confidence was not sustained, with many households concerned about President-elect Trump's economic policies.

Nearly half of those surveyed feared that tariffs could raise the cost of living. These worries, along with the Federal Reserve's cautious stance on interest rate cuts in 2025 due to inflation, contribute to a more uncertain outlook for the US economy.

Canada's Mixed Economic Data Signals Potential Slowdown Ahead

On the CAD front, Canada’s GDP rose by 0.3% in October, which was better than the expected 0.1% decline. This unexpected growth shows some strength in the Canadian economy.

However, the Raw Material Price Index dropped by 0.5% in November, a sharp fall from October's 4.0% increase. This was also much lower than the anticipated 0.6% rise.

Looking ahead, Canada’s economy is expected to shrink slightly by 0.1% in November. This would mark the first monthly contraction of the year, which aligns with the Bank of Canada’s recent warnings about slower growth.

The central bank had also revised its growth forecasts downwards, reflecting concerns about weaker economic conditions.

These mixed data points suggest that while Canada’s economy showed some positive signs, there are still challenges ahead, and growth may slow in the coming months.

USD/CAD Price Chart - Source: Tradingview
USD/CAD Price Chart - Source: Tradingview

USD/CAD – Technical Analysis

The USD/CAD pair remains under modest downward pressure, trading at $1.43750, a slight decrease of 0.01%.

The key pivot point for this pair is at $1.43872, which will be critical in determining the next move. Immediate resistance is located at $1.44635, with subsequent resistance levels at $1.45197 and $1.45741.

On the downside, immediate support is found at $1.43228, followed by $1.42559 and $1.41957.

The 50-day Exponential Moving Average (EMA) is at $1.43833, very close to the current price, signaling a consolidation phase.

The Relative Strength Index (RSI) at 47 suggests neutral market sentiment, with neither bulls nor bears having a clear advantage.

A sustained break above $1.43872 could push the price toward higher resistance levels, whereas a failure to hold above immediate support at $1.43228 may lead to further declines towards the next key support at $1.42559.

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USD /CAD

Daily Trade Ideas

USD/CAD Price Analysis and Trade Forecast: Daily Trading Signal

By LonghornFX Technical Analysis
Dec 24, 2024
Usdcad

Daily Price Outlook

- USD/CAD remains near $1.43750, testing key pivot at $1.43872.

- Immediate resistance at $1.44635 and support at $1.43228.

- RSI at 47 indicates neutral momentum; price action will dictate future direction.

The USD/CAD pair remains under modest downward pressure, trading at $1.43750, a slight decrease of 0.01%.

The key pivot point for this pair is at $1.43872, which will be critical in determining the next move. Immediate resistance is located at $1.44635, with subsequent resistance levels at $1.45197 and $1.45741.

On the downside, immediate support is found at $1.43228, followed by $1.42559 and $1.41957.

The 50-day Exponential Moving Average (EMA) is at $1.43833, very close to the current price, signaling a consolidation phase.

The Relative Strength Index (RSI) at 47 suggests neutral market sentiment, with neither bulls nor bears having a clear advantage.

A sustained break above $1.43872 could push the price toward higher resistance levels, whereas a failure to hold above immediate support at $1.43228 may lead to further declines towards the next key support at $1.42559.

USD/CAD Price Chart - Source: Tradingview
USD/CAD Price Chart - Source: Tradingview

USD/CAD - Trade Ideas

Entry Price – Sell Limit 1.43869

Take Profit – 1.43210

Stop Loss – 1.44354

Risk to Reward – 1: 1.3

Profit & Loss Per Standard Lot = +$659/ -$485

Profit & Loss Per Mini Lot = +$65/ -$48

USD /CAD

Technical Analysis

USD/CAD Price Analysis – Dec 17, 2024

By LonghornFX Technical Analysis
Dec 17, 2024
Usdcad

Daily Price Outlook

During the European trading session, the USD/CAD currency pair continued its upward trend, staying strong around the 1.4280 level and even reaching an intra-day high of 1.4294.

The reason for this rise can be attributed to the US Dollar bouncing back from its losses in the previous sessions, partly due to higher Treasury yields.

At the time, the US Dollar Index (DXY), which tracks the USD against six major currencies, was holding steady near the 107.00 mark. US Treasury bond yields were also higher, with the 2-year at 4.26% and the 10-year at 4.41%.

On the other hand, the Canadian Dollar (CAD) struggled to maintain its ground due to dovish comments from Bank of Canada (BoC) Governor Tiff Macklem.

Speaking on Monday, Macklem mentioned that the BoC is preparing for an uncertain future with increased vulnerability to economic shocks.

He also noted that the central bank would assess the need for further rate cuts cautiously, taking a more gradual approach to monetary policy, depending on how the economy evolves. This outlook has left the CAD under pressure, contributing to USD/CAD's bullish momentum.

Challenges for the Canadian Dollar Amid Political Uncertainty and Economic Concerns

As we mentioned, the Canadian Dollar (CAD) has been facing challenges recently. In addition to the Bank of Canada’s (BoC) dovish stance, there are political issues weighing on the currency.

Prime Minister Justin Trudeau is facing pressure to resign after Finance Minister Chrystia Freeland announced on Monday that she is stepping down from the Cabinet. This political uncertainty has added to the CAD's struggles, making it harder for the currency to strengthen.

On top of this, the BoC Governor, Tiff Macklem, has made comments that suggest the central bank is preparing for a more uncertain future. Traders will be closely watching Canada’s November Consumer Price Index (CPI) inflation data, which is due later today.

Moreover, the release of November’s US retail sales data in the North American session could also impact the currency market. With these developments, the CAD faces a challenging environment in the near term.

US Dollar Strengthens Amid Higher Treasury Yields and Strong Economic Data, Focus on Fed's Rate Cut Decision

On the US front, the broad-based US dollar is gaining support as it recovers from losses in the previous two sessions.

This strength is linked to higher Treasury yields, with the US Dollar Index (DXY) trading around 107.00. The yields on US Treasury bonds for both 2-year and 10-year bonds are at 4.26% and 4.41%, respectively.

Recent economic data showing strong growth in the US is also supporting the USD. The S&P Global flash US Services PMI for December jumped to 58.5, its highest in 38 months, and the Composite PMI rose to 56.6, the highest in 33 months. These figures signal solid economic performance, even though the Manufacturing PMI showed a slight decline.

Traders are now focused on the upcoming decision from the US Federal Reserve (Fed), particularly the possibility of an interest rate cut. The market is nearly fully pricing in a quarter-point rate cut at the Fed’s December meeting.

Moving ahead, traders focus is on the Fed's projections for 2025, as this will give more clarity on their future plans. Therefore, the strong US economic data, combined with expectations of a potential rate cut, has raised hopes that the Fed might not be as dovish as previously expected, which is adding support to the USD.

USD/CAD Price Chart - Source: Tradingview
USD/CAD Price Chart - Source: Tradingview

USD/CAD - Trade Ideas

USD/CAD is trading at $1.42708, up 0.19%, maintaining its bullish momentum as buyers push prices above key levels.

On the 4-hour chart, the pair trades above the pivot point at $1.42549, signaling continued upside potential. Immediate resistance stands at $1.42923, with a breakout opening the path toward the next key levels at $1.43147 and $1.43365.

The 50 EMA, currently at $1.42065, serves as strong support, reinforcing bullish sentiment. A retest of the pivot point near $1.42549 could attract fresh buyers, as the uptrend remains intact.

On the downside, immediate support rests at $1.42243, with further levels at $1.41986 and $1.41689 offering strong downside protection.

The Relative Strength Index (RSI) stands at 68, hovering near overbought territory but still signaling strong buying pressure. This suggests that USD/CAD could see further upside before any significant pullback.

Technical indicators, including price action above the 50 EMA and the pivot point, confirm the bullish outlook. Traders are closely watching for a decisive move above $1.42923, which could extend the rally to higher resistance levels.

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Daily Trade Ideas

USD/CAD Price Analysis and Trade Forecast: Daily Trading Signal

By LonghornFX Technical Analysis
Dec 17, 2024
Usdcad

Daily Price Outlook

- USD/CAD trades above the pivot point at $1.42549, signaling bullish strength.

- RSI at 68 reflects strong buying momentum, nearing overbought conditions.

- Entry strategy: Buy Limit $1.42552, Take Profit $1.42928, Stop Loss $1.42270.

USD/CAD is trading at $1.42708, up 0.19%, maintaining its bullish momentum as buyers push prices above key levels.

On the 4-hour chart, the pair trades above the pivot point at $1.42549, signaling continued upside potential. Immediate resistance stands at $1.42923, with a breakout opening the path toward the next key levels at $1.43147 and $1.43365.

The 50 EMA, currently at $1.42065, serves as strong support, reinforcing bullish sentiment. A retest of the pivot point near $1.42549 could attract fresh buyers, as the uptrend remains intact. On the downside, immediate support rests at $1.42243, with further levels at $1.41986 and $1.41689 offering strong downside protection.

The Relative Strength Index (RSI) stands at 68, hovering near overbought territory but still signaling strong buying pressure. This suggests that USD/CAD could see further upside before any significant pullback.

Technical indicators, including price action above the 50 EMA and the pivot point, confirm the bullish outlook. Traders are closely watching for a decisive move above $1.42923, which could extend the rally to higher resistance levels.

USD/CAD Price Chart - Source: Tradingview
USD/CAD Price Chart - Source: Tradingview

USD/CAD - Trade Ideas

Entry Price – Buy Limit 1.42552

Take Profit – 1.42928

Stop Loss – 1.42270

Risk to Reward – 1: 1.3

Profit & Loss Per Standard Lot = +$376/ -$282

Profit & Loss Per Mini Lot = +$37/ -$28

USD /CAD

Daily Trade Ideas

USD/CAD Price Analysis and Trade Forecast: Daily Trading Signal

By LonghornFX Technical Analysis
Dec 10, 2024
Usdcad

Daily Price Outlook

- Pivot-Based Outlook: Bearish bias below $1.41888; support at $1.41456 and $1.41004.

- Resistance Levels: Immediate resistance at $1.42266; stronger barriers at $1.42657.

- Momentum Indicators: RSI at 64 indicates strong momentum but nearing overbought conditions.

The USD/CAD pair is trading at $1.4174, down 0.01%, as price action consolidates just below its pivot point at $1.41888.

The pair is exhibiting a cautious bearish tone, reflecting mixed sentiment as traders assess near-term catalysts, including broader dollar strength and oil price fluctuations, which directly influence the Canadian dollar.

The RSI at 64 signals strong momentum but suggests the pair is approaching overbought territory, potentially capping further upside.

Immediate resistance is observed at $1.42266, with additional levels at $1.42657, highlighting significant barriers for bullish advances.

On the downside, immediate support lies at $1.41456, with further safety nets at $1.41004 and $1.40660. A decisive break below the $1.41456 level could signal a continuation of bearish momentum, targeting deeper retracements.

Technical indicators support a cautious outlook. The 50-day EMA at $1.40959 aligns closely with support levels, providing a key reference for potential pullbacks.

If the pair sustains trading below the pivot, bearish pressure could intensify, targeting the $1.41409 region. Conversely, a break above $1.41888 could shift sentiment to the upside, opening the door to retest $1.42266 and higher levels.

Traders are advised to monitor the $1.41841 level for entry opportunities. Selling below this threshold with a target of $1.41409 and a stop-loss at $1.42178 aligns with the current technical landscape, offering a favorable risk-reward setup.

USD/CAD Price Chart - Source: Tradingview
USD/CAD Price Chart - Source: Tradingview

USD/CAD - Trade Ideas

Entry Price – Sell Below 1.41841

Take Profit – 1.41409

Stop Loss – 1.42178

Risk to Reward – 1: 1.2

Profit & Loss Per Standard Lot = +$432/ -$337

Profit & Loss Per Mini Lot = +$43/ -$33

USD /CAD

Technical Analysis

USD/CAD Price Analysis – Dec 10, 2024

By LonghornFX Technical Analysis
Dec 10, 2024
Usdcad

Daily Price Outlook

During the European trading session on Tuesday, the USD/CAD currency pair continued its upward momentum, reaching a fresh four-year high of 1.4200.

However, the reason for its upward trend could be linked to the bullish US Dollar, which saw gains ahead of the release of the highly anticipated US Consumer Price Index (CPI) data for November, scheduled for Wednesday.

At the same time, the Canadian Dollar (CAD) faced ongoing pressure, further weakened by investor expectations that the Bank of Canada (BoC) could announce another interest rate cut.

Many are forecasting a 50-basis-point reduction, potentially lowering the rate to 3.25% in the upcoming monetary policy meeting on Wednesday. This outlook for the BoC has kept sentiment around the CAD cautious, as traders brace for the possibility of a more dovish stance from the central bank.

US Dollar Strengthens Ahead of CPI Data, Impacting USD/CAD Outlook

On the US front, the broad-based US Dollar strengthened ahead of the release of the US Consumer Price Index (CPI) data for November, which will be published on Wednesday.

The US Dollar Index (DXY), which tracks the Greenback against six major currencies, hit a two-day high of 106.35. The upcoming inflation data is expected to play a big role in shaping market expectations for the Federal Reserve’s (Fed) interest rate decisions.

Investors are anticipating that the Fed will cut its key borrowing rates by 25 basis points, bringing them to a range of 4.25%-4.50% at its next policy meeting on December 18, according to the CME FedWatch tool.

Economists predict that the annual headline inflation will rise to 2.7% from 2.6% in October, while the core CPI, which excludes food and energy prices, is expected to increase by 3.3%. On a month-to-month basis, headline and core CPI are projected to rise by 0.2% and 0.3%, respectively.

If the inflation data shows signs of slowing down, it could lead to more bets on a dovish Federal Reserve, meaning more rate cuts. On the other hand, if inflation remains high, it could reduce these expectations, keeping the Fed’s rate cut plans in question.

Therefore, the inflation data will likely impact the USD/CAD pair, with signs of slowing inflation boosting expectations for a Fed rate cut, strengthening the USD. Conversely, higher inflation could weaken these expectations, potentially limiting the USD’s strength against the CAD.

Weak Outlook for the Canadian Dollar as Investors Anticipate BoC Rate Cut

On the other hand, the outlook for the Canadian Dollar (CAD) remains weak as investors expect the Bank of Canada (BoC) to cut interest rates by 50 basis points to 3.25% in its upcoming meeting on Wednesday.

This expectation is driven by the current economic conditions in Canada, where the BoC is focusing on maintaining a balanced economy.

The Canadian labor market has shown a significantly lower unemployment rate, and inflation pressures are staying within the BoC's target of 2%. These factors have led to expectations that the BoC might adopt a more dovish stance, potentially lowering interest rates to support growth.

If the BoC follows through with a rate cut, it could further weaken the CAD, making the currency less attractive to investors compared to the US Dollar.

USD/CAD Price Chart - Source: Tradingview
USD/CAD Price Chart - Source: Tradingview

USD/CAD – Technical Analysis

The USD/CAD pair is trading at $1.4174, down 0.01%, as price action consolidates just below its pivot point at $1.41888.

The pair is exhibiting a cautious bearish tone, reflecting mixed sentiment as traders assess near-term catalysts, including broader dollar strength and oil price fluctuations, which directly influence the Canadian dollar.

The RSI at 64 signals strong momentum but suggests the pair is approaching overbought territory, potentially capping further upside.

Immediate resistance is observed at $1.42266, with additional levels at $1.42657, highlighting significant barriers for bullish advances.

On the downside, immediate support lies at $1.41456, with further safety nets at $1.41004 and $1.40660. A decisive break below the $1.41456 level could signal a continuation of bearish momentum, targeting deeper retracements.

Technical indicators support a cautious outlook. The 50-day EMA at $1.40959 aligns closely with support levels, providing a key reference for potential pullbacks.

If the pair sustains trading below the pivot, bearish pressure could intensify, targeting the $1.41409 region. Conversely, a break above $1.41888 could shift sentiment to the upside, opening the door to retest $1.42266 and higher levels.

Traders are advised to monitor the $1.41841 level for entry opportunities. Selling below this threshold with a target of $1.41409 and a stop-loss at $1.42178 aligns with the current technical landscape, offering a favorable risk-reward setup.

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Technical Analysis

USD/CAD Price Analysis – Dec 03, 2024

By LonghornFX Technical Analysis
Dec 3, 2024
Usdcad

Daily Price Outlook

During the European trading session, the USD/CAD currency pair continued its bearish trend, remaining under pressure around the 1.4040 level, even hitting an intraday low of 1.4010.

This downward movement was largely driven by a weakening US dollar, which has been losing momentum amid growing expectations that the Federal Reserve could cut rates in December.

On top of that, speculation that OPEC+ may delay its plans to boost oil production has been supporting crude prices for a second consecutive day.

This, combined with a reduced likelihood of a significant rate cut by the Bank of Canada (BoC) in December, is weighing on the Canadian Dollar, further pressuring the USD/CAD pair.

Geopolitical Risks, Oil Prices, and US Economic Data Influence USD/CAD Movement

Despite a ceasefire deal between Israel and the Lebanon-based Hezbollah militant group, the geopolitical risk premium remains high due to the ongoing Russia-Ukraine conflict. This uncertainty continues to weigh on global markets.

At the same time, expectations that OPEC+ will delay plans to increase oil production are providing support to crude oil prices for a second consecutive day.

This, coupled with reduced expectations for a large rate cut by the Bank of Canada (BoC) in December, is putting pressure on the Canadian Dollar (CAD), which is a commodity-linked currency. As a result, the USD/CAD pair is seeing some downward pressure.

Meanwhile, the US Dollar Index (DXY), which tracks the greenback against a basket of currencies, is struggling to build on its recent bounce from a nearly three-week low.

The increased likelihood of the Federal Reserve cutting rates in December has weakened the dollar. However, investors are betting that US President-elect Donald Trump's expansionary policies could lead to higher inflation, prompting the Fed to keep rates higher for longer. This provides some support to US bond yields and, in turn, the USD.

Looking ahead, traders will focus on the release of the US JOLTS Job Openings data later today, which could offer short-term trading opportunities.

Meanwhile, the US economic data this week, including the Nonfarm Payrolls (NFP) report and Fed Chair Jerome Powell’s speech, will likely influence expectations for US interest rates. The outcome of Thursday's OPEC+ meeting will also be crucial for oil prices and could impact the USD/CAD pair.

USD/CAD Price Chart - Source: Tradingview
USD/CAD Price Chart - Source: Tradingview

USD/CAD – Technical Analysis

USD/CAD remains steady at $1.4058, registering minimal change for the session (-0.00%). The pair hovers just below the pivot point at $1.40893, reflecting indecision as the market consolidates after recent gains.

The 4-hour chart shows price action closely aligned with the 50 EMA at $1.40264, suggesting a delicate balance between bullish and bearish forces.

Immediate resistance is at $1.41291, a level that aligns with the upper end of the current range. A break above this resistance could push the pair toward $1.41776, a key psychological barrier.

On the downside, immediate support at $1.40242 is critical; a breach would likely expose $1.39821, with further declines potentially targeting $1.39489. The RSI stands at 54, indicating mild bullish momentum but no significant overbought or oversold conditions.

The technical landscape favors a cautious bearish bias, particularly if prices fail to reclaim the pivot level. A recommended trade strategy is to sell below $1.40584, targeting $1.40019 as the take-profit level, with a prudent stop-loss at $1.41090.

This setup leverages the pair's proximity to the 50 EMA and aligns with its recent inability to sustain a clear breakout.

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Daily Trade Ideas

USD/CAD Price Analysis and Trade Forecast: Daily Trading Signal

By LonghornFX Technical Analysis
Dec 3, 2024
Usdcad

Daily Price Outlook

- Support and Resistance: Immediate resistance at $1.41291, while critical support lies at $1.40242 and $1.39821.

- Trend Indicators: Price near the 50 EMA ($1.40264); RSI at 54 reflects mild bullish bias without extremes.

- Trade Setup: Sell below $1.40584, targeting $1.40019 with a stop-loss at $1.41090.

USD/CAD remains steady at $1.4058, registering minimal change for the session (-0.00%). The pair hovers just below the pivot point at $1.40893, reflecting indecision as the market consolidates after recent gains.

The 4-hour chart shows price action closely aligned with the 50 EMA at $1.40264, suggesting a delicate balance between bullish and bearish forces.

Immediate resistance is at $1.41291, a level that aligns with the upper end of the current range. A break above this resistance could push the pair toward $1.41776, a key psychological barrier.

On the downside, immediate support at $1.40242 is critical; a breach would likely expose $1.39821, with further declines potentially targeting $1.39489. The RSI stands at 54, indicating mild bullish momentum but no significant overbought or oversold conditions.

The technical landscape favors a cautious bearish bias, particularly if prices fail to reclaim the pivot level. A recommended trade strategy is to sell below $1.40584, targeting $1.40019 as the take-profit level, with a prudent stop-loss at $1.41090.

This setup leverages the pair's proximity to the 50 EMA and aligns with its recent inability to sustain a clear breakout.

USD/CAD Price Chart - Source: Tradingview
USD/CAD Price Chart - Source: Tradingview

USD/CAD - Trade Ideas

Entry Price – Sell Below 1.40584

Take Profit – 1.40019

Stop Loss – 1.41090

Risk to Reward – 1: 1.12

Profit & Loss Per Standard Lot = +$565 -$506

Profit & Loss Per Mini Lot = +$56/ -$50

USD /CAD

Daily Trade Ideas

USD/CAD Price Analysis and Trade Forecast: Daily Trading Signal

By LonghornFX Technical Analysis
Nov 26, 2024
Usdcad

Daily Price Outlook

- Bullish Momentum: USD/CAD climbs above the pivot point at $1.41776, signaling upside potential.

- Resistance Levels: Immediate resistance at $1.42147, with the next target at $1.42513.

- Overbought Risk: RSI at 67 hints at possible short-term corrections.

USD/CAD is trading at $1.41054, up 0.86%, as the pair continues to build on bullish momentum, testing key resistance near $1.41191. The pair remains above its pivot point at $1.41776, signaling the potential for further upside if buyers sustain control. Immediate resistance is located at $1.42147, with additional barriers at $1.42513.

On the downside, immediate support lies at $1.40828, followed by stronger levels at $1.40531 and $1.40242, where buyers may look to re-enter if the pair retraces. The 50-day EMA, currently at $1.39861, serves as a dynamic support, reinforcing the upward trajectory.

The RSI at 67 suggests the pair is nearing overbought territory, which could trigger profit-taking in the short term. A break below $1.41198 may expose USD/CAD to a corrective pullback toward the $1.40531 support. Conversely, a sustained break above $1.41776 could pave the way for a rally toward $1.42147 and beyond.

USD/CAD Price Chart - Source: Tradingview
USD/CAD Price Chart - Source: Tradingview

USD/CAD - Trade Ideas

Entry Price – Sell Below 1.41198

Take Profit – 1.40531

Stop Loss – 1.41698

Risk to Reward – 1: 1.3

Profit & Loss Per Standard Lot = +$667/ -$500

Profit & Loss Per Mini Lot = +$66/ -$50

USD /CAD

Technical Analysis

USD/CAD Price Analysis – Nov 26, 2024

By LonghornFX Technical Analysis
Nov 26, 2024
Usdcad

Daily Price Outlook

Despite the US Dollar bearish bias, the USD/CAD pair has continued to rise, trading around 1.4090, with an intra-day high of 1.4178.

However, the upward trend can be largely attributed to market uncertainty sparked by President-elect Donald Trump's announcement of a 25% tariff on imports from Mexico and Canada, along with a 10% increase in tariffs on Chinese goods entering the US.

These developments weighed heavily on the Canadian Dollar, which is sensitive to risk, pushing the USD/CAD higher.

Moreover, weaker oil prices are adding pressure on the CAD as Canada is the largest oil exporter to the US, its currency often moves in line with oil price changes. When crude prices drop, the CAD tends to weaken, further fueling the rise in USD/CAD.

USD/CAD Surges Amid Tariff Concerns and Falling Oil Prices

However, the global market sentiment has been flashing red as market uncertainty increased following President-elect Donald Trump's announcement of a 25% tariff on imports from Mexico and Canada, along with a 10% increase in tariffs on Chinese goods entering the US.

This news has weakened market sentiment, putting pressure on the Canadian Dollar (CAD), which is sensitive to such risk factors.

US President-elect Donald Trump and Canadian Prime Minister Justin Trudeau had a positive talk on trade and border security on Monday night. While the conversation was seen as constructive, Canada’s Deputy Prime Minister did not mention Trump’s threat of tariffs.

She stressed that the Canada-US relationship is balanced and beneficial, especially for American workers, but the threat of tariffs is still affecting market sentiment.

On the other hand, the weaker crude oil prices are adding pressure on the CAD. As Canada is the largest oil exporter to the US, the value of the Canadian Dollar often moves in sync with oil price changes. At the time of writing, West Texas Intermediate (WTI) oil is trading around $69.00.

The decline in oil prices follows reports of a potential resolution to the Israel-Hezbollah conflict, easing geopolitical tensions and further contributing to the drop in oil prices, which typically weakens the CAD.

Therefore, the combination of tariff concerns and falling oil prices is putting downward pressure on the Canadian Dollar, leading to a continued rise in the USD/CAD pair. This allows the USD to strengthen against the CAD, pushing the pair higher.

USD Faces Pressure Amid Fed's Rate Cut Comments, but Strong PMI Data Provides Stability

On the US front, the US Dollar (USD) is facing pressure after comments from Federal Reserve (Fed) officials on Tuesday. Federal Reserve Bank of Chicago President Austan Goolsbee suggested that the Fed is likely to continue lowering interest rates to a neutral level, which neither stimulates nor restricts economic activity.

Meanwhile, Minneapolis Fed President Neel Kashkari mentioned that it might be appropriate to consider another rate cut at the Fed's meeting in December, according to Bloomberg.

Despite these dovish signals, the declines in the US dollar could be short-lived. This is mainly due to strong preliminary data from the S&P Global US Purchasing Managers’ Index (PMI), which shows better-than-expected economic performance.

These solid figures have helped reduce concerns about the economy, supporting the idea that the Fed may take a more gradual approach to further rate cuts.

Therefore, the Fed's dovish comments put some pressure on the USD, but strong PMI data provides support. This mixed outlook limits significant declines in the USD, helping to keep the USD/CAD pair relatively stable, with potential for gradual upward movement.

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