USD/CAD Hovers Near 1.3900 Amid Fed Decision and Oil Price Recovery
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USD/CAD pulls back from an all-time high as traders await the Fed’s policy decision. The US Dollar remains supported by "Trump trades," although a modest Fed rate cut could influence short-term sentiment. Meanwhile, rising oil prices provide some strength to the Canadian Dollar, helping contain the pair’s upside.
USD/CAD Awaits Fed Decision as Oil Prices and Treasury Yields Shift
The USD/CAD pair trades near 1.3900 after pulling back from an all-time high of 1.3958. This shift reflects some renewed strength in the Canadian Dollar (CAD) as oil prices recover, alongside a mild correction in the US Dollar Index (DXY), which pulled back from Wednesday’s four-month high.
Fed’s Rate Decision: Will It Support the US Dollar?
Market participants are focusing on the upcoming Federal Reserve (Fed) meeting, where a 25 basis point rate cut is widely anticipated. According to the CME FedWatch Tool, the likelihood of this cut stands at 98.1%. While a rate cut might typically weaken the US Dollar, the DXY could remain supported due to recent shifts in fiscal policy under Trump’s new administration, which promises further tariffs and corporate tax cuts.
CAD Gains Ground from Oil Price Rebound
The Canadian Dollar, which is closely tied to oil prices, has received a boost as West Texas Intermediate (WTI) crude edges toward $72.00 per barrel. Oil’s recovery adds positive momentum for CAD, given Canada’s status as a leading oil exporter to the US.
Technical Outlook: USD/CAD Near Key Resistance
USD/CAD holds close to 1.3900, and technical indicators suggest the potential for limited downside, provided the US Dollar’s support from higher Treasury yields persists.
Resistance: The all-time high at 1.3958 is the immediate resistance level, with the psychological 1.4000 mark following closely.
Support: The 1.3830 level is the initial downside target, with more substantial support around 1.3700 if a deeper correction occurs.
Outlook Ahead
As both the Fed and BoC maintain a cautious approach to rate adjustments, USD/CAD may continue to trade within a narrow range until clearer economic data or policy updates emerge. Key areas of focus will include Fed Chairman Jerome Powell's commentary on inflation and interest rate expectations, as well as oil price trends that could further impact CAD's resilience in the face of a strong USD.
USD/CAD Awaits Fed Decision as Oil Prices and Treasury Yields Shift
The USD/CAD pair trades near 1.3900 after pulling back from an all-time high of 1.3958. This shift reflects some renewed strength in the Canadian Dollar (CAD) as oil prices recover, alongside a mild correction in the US Dollar Index (DXY), which pulled back from Wednesday’s four-month high.
Fed’s Rate Decision: Will It Support the US Dollar?
Market participants are focusing on the upcoming Federal Reserve (Fed) meeting, where a 25 basis point rate cut is widely anticipated. According to the CME FedWatch Tool, the likelihood of this cut stands at 98.1%. While a rate cut might typically weaken the US Dollar, the DXY could remain supported due to recent shifts in fiscal policy under Trump’s new administration, which promises further tariffs and corporate tax cuts.
CAD Gains Ground from Oil Price Rebound
The Canadian Dollar, which is closely tied to oil prices, has received a boost as West Texas Intermediate (WTI) crude edges toward $72.00 per barrel. Oil’s recovery adds positive momentum for CAD, given Canada’s status as a leading oil exporter to the US.
Technical Outlook: USD/CAD Near Key Resistance
USD/CAD holds close to 1.3900, and technical indicators suggest the potential for limited downside, provided the US Dollar’s support from higher Treasury yields persists.
Resistance: The all-time high at 1.3958 is the immediate resistance level, with the psychological 1.4000 mark following closely.
Support: The 1.3830 level is the initial downside target, with more substantial support around 1.3700 if a deeper correction occurs.
Outlook Ahead
As both the Fed and BoC maintain a cautious approach to rate adjustments, USD/CAD may continue to trade within a narrow range until clearer economic data or policy updates emerge. Key areas of focus will include Fed Chairman Jerome Powell's commentary on inflation and interest rate expectations, as well as oil price trends that could further impact CAD's resilience in the face of a strong USD.