USD/CAD stalls near 1.3850 as Fed controversy fuels further weakness

The USD/CAD pair is treading water near the 1.3850 zone on Tuesday, struggling to extend its rebound after printing a fresh six-month low closer to the 1.3800 handle. The broader US Dollar remains on the defensive following two weeks of heavy losses, pressured by political risks and speculation about Federal Reserve leadership changes. President Trump’s criticism of Jerome Powell and suggestions of a possible dismissal have intensified concerns over the Fed’s independence, further dampening confidence in the Greenback.

The US Dollar Index (DXY) staged a modest bounce toward the 98.50 area after touching a three-year low at 98.00, but overall sentiment remains fragile. Investors are bracing for deeper losses amid persistent tensions around US-China trade, Powell’s autonomy, and growing doubts about the USD’s reserve status. Meanwhile, the Canadian Dollar holds steady, supported by expectations that the Bank of Canada will maintain a neutral monetary policy stance.

From a technical perspective, USD/CAD maintains a bearish bias. The pair is currently trading around 1.3800, within a narrow range of 1.3781–1.3852. The Relative Strength Index (RSI) is holding near 31, suggesting neutral momentum, while the Moving Average Convergence Divergence (MACD) and Momentum indicators are both flashing sell signals. Major moving averages, including the 20-day (1.4103), 100-day (1.4278), and 200-day (1.4006) Simple Moving Averages, all slope downward, confirming a bearish trend. Additional resistance is noted at 1.3805, 1.3934, and 1.3938.

Unless the political dust settles or incoming US data shifts sentiment, USD/CAD is likely to remain capped below the 1.3930–1.3940 zone, with risk skewed toward a further dip beneath 1.3800.

USD/CAD daily chart