USD/CAD Price Forecast: Finds some support near 1.4300; not out of the woods yet
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UPGRADE- USD/CAD stages a modest intraday recovery on Thursday, though the upside seems limited.
- Fed rate cut bets, and economic worries weigh heavily on the USD and might cap the major.
- Rebounding Oil prices underpin the Loonie and should contribute to keeping a lid on the pair.
The USD/CAD pair bounces off the 1.4300 neighborhood, or over a one-week low touched this Thursday, though it might struggle to register any meaningful recovery amid the prevalent US Dollar (USD) selling bias. In fact, the USD Index (DXY), which tracks the Greenback against a basket of currencies, sinks to its lowest level since early November amid rising bets that the Federal Reserve (Fed) could cut interest rates multiple times in 2025. The bets were reaffirmed by a report published by the Automatic Data Processing (ADP) report on Wednesday, which revealed that US private sector employment grew by just 77K in February against 140K expected.
This comes on top of worries that US President Donald Trump's trade tariffs could slow the US economic growth in the long run and overshadows data showing that the economic activity in the US service sector continued to expand at an accelerating pace in February. Apart from this, the upbeat market mood is seen as another factor exerting downward pressure on the safe-haven buck. The White House announced a one-month delay for US automakers to comply with the US–Mexico–Canada Agreement from the tariffs imposed on Mexico and Canada. This eases trade war fears and boosts investors' appetite for riskier assets.
The Canadian Dollar (CAD), on the other hand, continues to draw support from bets the Bank of Canada (BoC) will likely pause rate cuts at its upcoming policy meeting later this month amid a slight acceleration in domestic consumer inflation. Moreover, some follow-through recovery in Crude Oil prices, from the lowest level since May 2023 touched on Wednesday, underpins the commodity-linked Loonie and supports prospects for a further depreciating move for the USD/CAD pair. Traders, however, might opt to wait for the release of crucial employment details from the US and Canada, due on Friday, before positioning for the next leg of a directional move.
In the meantime, Thursday's economic docket – featuring the release of the usual Weekly Initial Jobless Claims data from the US and Canadian Ivey PMI – might provide some impetus later during the early North American session. Apart from this, speeches from influential FOMC members will drive the USD demand, which, along with Oil price dynamics, should contribute to producing short-term trading opportunities around the USD/CAD pair. Nevertheless, the aforementioned fundamental backdrop warrants some caution before confirming that this week's corrective pullback from the vicinity of mid-1.4500s, or a one-month high has run its course.
Technical Outlook
From a technical perspective, the 1.4300 mark, or over a one-week trough touched earlier today, should now act as a key pivotal point. A convincing break below could make the USD/CAD pair vulnerable to accelerate the slide further towards the 1.4255 intermediate support en route to sub-1.4200 levels. The latter coincides with the 100-day Simple Moving Average (SMA), which if broken decisively would be seen as a fresh trigger for bearish traders and pave the way for deeper losses.
Meanwhile, oscillators on the daily chart – though they have been losing positive traction – are yet to confirm a negative outlook and warrant some caution for bearish traders. Any further recovery, however, is more likely to confront stiff resistance near the 1.4400 mark. The subsequent move-up has the potential to lift the USD/CAD pair further towards the 1.4470-1.4475 horizontal barrier en route to the 1.4500 psychological mark and the 1.4545 area, or the monthly swing high set on Tuesday.
- USD/CAD stages a modest intraday recovery on Thursday, though the upside seems limited.
- Fed rate cut bets, and economic worries weigh heavily on the USD and might cap the major.
- Rebounding Oil prices underpin the Loonie and should contribute to keeping a lid on the pair.
The USD/CAD pair bounces off the 1.4300 neighborhood, or over a one-week low touched this Thursday, though it might struggle to register any meaningful recovery amid the prevalent US Dollar (USD) selling bias. In fact, the USD Index (DXY), which tracks the Greenback against a basket of currencies, sinks to its lowest level since early November amid rising bets that the Federal Reserve (Fed) could cut interest rates multiple times in 2025. The bets were reaffirmed by a report published by the Automatic Data Processing (ADP) report on Wednesday, which revealed that US private sector employment grew by just 77K in February against 140K expected.
This comes on top of worries that US President Donald Trump's trade tariffs could slow the US economic growth in the long run and overshadows data showing that the economic activity in the US service sector continued to expand at an accelerating pace in February. Apart from this, the upbeat market mood is seen as another factor exerting downward pressure on the safe-haven buck. The White House announced a one-month delay for US automakers to comply with the US–Mexico–Canada Agreement from the tariffs imposed on Mexico and Canada. This eases trade war fears and boosts investors' appetite for riskier assets.
The Canadian Dollar (CAD), on the other hand, continues to draw support from bets the Bank of Canada (BoC) will likely pause rate cuts at its upcoming policy meeting later this month amid a slight acceleration in domestic consumer inflation. Moreover, some follow-through recovery in Crude Oil prices, from the lowest level since May 2023 touched on Wednesday, underpins the commodity-linked Loonie and supports prospects for a further depreciating move for the USD/CAD pair. Traders, however, might opt to wait for the release of crucial employment details from the US and Canada, due on Friday, before positioning for the next leg of a directional move.
In the meantime, Thursday's economic docket – featuring the release of the usual Weekly Initial Jobless Claims data from the US and Canadian Ivey PMI – might provide some impetus later during the early North American session. Apart from this, speeches from influential FOMC members will drive the USD demand, which, along with Oil price dynamics, should contribute to producing short-term trading opportunities around the USD/CAD pair. Nevertheless, the aforementioned fundamental backdrop warrants some caution before confirming that this week's corrective pullback from the vicinity of mid-1.4500s, or a one-month high has run its course.
Technical Outlook
From a technical perspective, the 1.4300 mark, or over a one-week trough touched earlier today, should now act as a key pivotal point. A convincing break below could make the USD/CAD pair vulnerable to accelerate the slide further towards the 1.4255 intermediate support en route to sub-1.4200 levels. The latter coincides with the 100-day Simple Moving Average (SMA), which if broken decisively would be seen as a fresh trigger for bearish traders and pave the way for deeper losses.
Meanwhile, oscillators on the daily chart – though they have been losing positive traction – are yet to confirm a negative outlook and warrant some caution for bearish traders. Any further recovery, however, is more likely to confront stiff resistance near the 1.4400 mark. The subsequent move-up has the potential to lift the USD/CAD pair further towards the 1.4470-1.4475 horizontal barrier en route to the 1.4500 psychological mark and the 1.4545 area, or the monthly swing high set on Tuesday.
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