The USD/CAD currency pair is currently facing challenges in maintaining upward momentum, following a modest uptick during the Asian trading session that saw it exceed the 1.4100 level. The recent improvement in risk sentiment and expectations of potential interest rate cuts by the Federal Reserve have led to a decline in the US dollar, subsequently capping the growth of USD/CAD. Additionally, a recent downturn in crude oil prices threatens to further pressure the Canadian dollar, limiting any upward movement of the currency pair.
After briefly rising just above the 1.4100 level, USD/CAD has seen renewed selling pressure, slipping to a fresh daily low around the 1.4070-1.4075 range. The outlook appears increasingly bearish as technical factors indicate vulnerability to further declines. Optimism regarding a temporary suspension of tariffs has supported global risk appetite; however, this has not translated into sustained strength for the dollar.
Throughout the week, USD/CAD has struggled to break above the pivotal 100-day Simple Moving Average, signaling a bearish trend. The ongoing momentum suggests that a decline below the weekly support levels of 1.4060-1.4055 could pave the way for additional losses, possibly revisiting the psychological level of 1.4000. A decisive break below this threshold may embolden bearish traders and extend the downward trajectory seen over the past two months.
As traders await forthcoming US consumer inflation data, caution is prevailing among investors, who are hesitant to make significant moves until clearer insights on the Fed’s monetary policy path emerge. If the pair manages to surpass its recent high around 1.4110, there may be limited upside potential capped near the 1.4175-1.4180 area, with a breakthrough eyeing a potential return to the 100-day SMA near 1.4300. A sustained rally beyond this level could signal a shift in sentiment, favoring bullish positions in the near term.
