USD/CAD Retreating from One-Month High

  • Factors Pressuring USD/CAD Pair:
  • A positive risk tone prompting selling around the safe-haven US Dollar
  • Fresh leg up in Oil prices underpinning the Canadian Dollar (Loonie)

The USD/CAD pair is facing challenges after reaching a one-month high of 1.3645-1.3650, dropping to around 1.3600 in the current session. Despite a rebound from a two-week low, the US Dollar is losing momentum against the Canadian Dollar due to positive market sentiment and rising Crude Oil prices.

Market Factors Driving the USD/CAD Pair

The recent rate cut by the US Federal Reserve (Fed) has impacted the USD’s performance. However, expectations of a larger rate cut by the Bank of Canada (BoC) next month are capping the Canadian Dollar’s gains and limiting losses for the USD/CAD pair. Additionally, dovish BoC expectations were fueled by weak consumer inflation figures, indicating a challenging economic environment in Canada.

Technical and Fundamental Analysis

From a technical standpoint, acceptance above the crucial 200-day Simple Moving Average (SMA) and an intraday breakout signal potential for upward movement in the near term for the USD/CAD pair.

Traders are now focused on upcoming US economic data releases, including Weekly Initial Jobless Claims, the Philly Fed Manufacturing Index, and Existing Home Sales. These factors, along with US bond yields and overall market sentiment, will influence demand for the US Dollar and the Canadian Dollar.

Canadian Dollar FAQs

Here are some key factors driving the Canadian Dollar (CAD) and influencing its value:

  • The level of interest rates set by the Bank of Canada (BoC)
  • Price of Oil, Canada’s largest export
  • Health of the Canadian economy
  • Inflation and Trade Balance
  • Market sentiment and US economic conditions

Understanding these factors can provide valuable insights for traders and investors looking to navigate the USD/CAD pair and the broader forex market.

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