USD/CAD Price Analysis – Dec 31, 2024
Daily Price Outlook
The Canadian dollar (CAD) strengthened slightly against the U.S. dollar (USD) on Monday as the greenback experienced modest losses during light holiday trading.
The USD/CAD pair is trading near 1.4362, reflecting the broader market’s reaction to declining U.S. Treasury yields and shifting investor expectations for Federal Reserve policies in 2025.
While the U.S. dollar has performed strongly throughout 2024, rising by 6.6% on the Dollar Index (DXY), recent geopolitical uncertainties and Canadian resilience have capped USD/CAD’s upward momentum.
The U.S. Federal Reserve’s surprise move to reduce its projected interest rate cuts for 2025—from 100 to 50 basis points—has bolstered the dollar against most global currencies.
However, Canada’s robust economic data, including strong job numbers and steady oil prices, provided support for the CAD, keeping USD/CAD fluctuations limited.
Federal Reserve Policies and Trump Administration Outlook
The Federal Reserve’s cautious stance on rate cuts reflects ongoing concerns over persistent inflation. U.S. Treasury yields dropped by roughly 2% this week, with the 2-year yield settling at 4.24% and the 10-year yield at 4.53%.
Meanwhile, President-elect Donald Trump’s policy agenda—centered on tariffs, tighter immigration rules, and increased fiscal spending—has added further uncertainty to global markets, driving USD gains.
Traders are also eyeing upcoming economic reports, including U.S. unemployment claims and Canadian manufacturing PMI data, which could influence USD/CAD’s trajectory. A favorable outcome for Canada could strengthen the CAD further, while disappointing data may bolster the greenback.
Geopolitical Risks and Canadian Dollar Stability
The Canadian dollar has weathered external pressures better than many emerging-market currencies, which remain vulnerable to the stark interest rate disparity between the U.S. and other economies. Meanwhile, geopolitical tensions, such as the ongoing Russia-Ukraine conflict, have weighed on global risk sentiment, supporting the safe-haven dollar.
USD/CAD – Technical Analysis
The USD/CAD pair is trading at $1.43622, up 0.05%, as it navigates a cautious upward trajectory. The pivot point at $1.44133 serves as a critical marker for directional momentum.
Immediate resistance is positioned at $1.44365, with higher targets at $1.44970 and $1.45508, representing potential barriers for sustained bullish momentum. On the downside, support levels lie at $1.43044, followed by $1.42583 and $1.42108, essential for preventing a deeper pullback.
The pair's price action remains underpinned by its proximity to the 50 EMA at $1.43874, which signals near-term consolidation.
The Relative Strength Index (RSI) at 43 reflects mildly bearish conditions, indicating that the pair is neither oversold nor poised for immediate upside strength.
A break above the pivot point at $1.44133 could validate bullish sentiment, targeting the next resistance at $1.44365. Conversely, slipping below the immediate support at $1.43044 may lead to a decline toward $1.42583.
Economic sentiment surrounding oil prices continues to influence the Canadian dollar, adding volatility to the pair.
Thin year-end liquidity and trader caution could magnify short-term movements. Watch for a decisive break above or below the pivot point to determine the pair's next directional move.
Related News
- GOLD Price Analysis – Dec 31, 2024
JOIN LONGHORNFX TODAY
24/7 live support, lightning fast withdrawals, guaranteed safe and reliable trading platforms with a true ECN broker.