USD/CAD Strengthens in Early European Session
The USD/CAD pair is showing strength, reaching around 1.3930 in Wednesday’s early European session, marking a 0.72% increase for the day. This positive movement is driven by several factors influencing the currency pair’s performance.
Factors Driving USD/CAD Movement
- US Dollar Performance: The US Dollar is gaining momentum across the board, fueled by the ongoing Trump trade dynamics. Recent polls indicating Republican candidate Donald Trump leading over Democratic candidate Kamala Harris in the US presidential election have contributed to the USD’s strength.
- Technical Analysis: Looking at the daily chart, the USD/CAD pair maintains a bullish trend supported by key indicators. The price remains above the 100-day Exponential Moving Average (EMA), signaling a positive outlook. Additionally, the 14-day Relative Strength Index (RSI) is above the midline, suggesting further upside potential in the near term.
Key Levels to Watch
As the USD/CAD pair continues its upward trajectory, it faces important resistance and support levels:
- Upside Barrier: The first hurdle for the pair is at 1.3972. A breakthrough above this level could propel USD/CAD towards the psychological mark of 1.4000 and potentially reach 1.4140, the weekly high of May 11.
- Downside Support: On the flip side, initial support is seen at 1.3836, with further downside potential towards 1.3750 and the key contention zone of 1.3700-1.3695, which includes the round figure and the 100-day EMA.
USD/CAD Daily Chart
Canadian Dollar FAQs
Understanding the factors influencing the Canadian Dollar (CAD) can provide valuable insights into its movements and performance in the forex market.
Key Factors Impacting CAD Value:
- Interest Rates: The level of interest rates set by the Bank of Canada (BoC) plays a crucial role in determining the CAD’s value. Higher interest rates tend to be positive for the CAD, influencing its strength in the forex market.
- Oil Prices: As Canada’s largest export, the price of Oil directly impacts the CAD’s value. Rising Oil prices typically lead to an increase in CAD value, while falling prices can have the opposite effect.
- Inflation and Economy: Inflation, economic health, and trade balance are also significant factors affecting the CAD. Strong economic indicators and inflation rates can contribute to a stronger CAD.
Overall, understanding these key factors can provide valuable insights for investors and traders looking to navigate the forex market effectively.