Daily Price Outlook
During the European trading session, the USD/CAD currency pair has failed to stop its downward trend and is still under pressure, trading around 1.4387.
The main reason for this losing streak is the strength of the Canadian Dollar (CAD). The Loonie has gained almost 2.6% from its high of 1.4800 on Monday, partly because US President Donald Trump decided to delay his plan to impose 25% tariffs on Canada and Mexico. This move helped boost the CAD, making the USD weaker in comparison.
Moreover, investors are now expecting the Bank of Canada (BoC) to cut interest rates by 25 basis points (bps) to 2.75% in its upcoming meeting in March. The possibility of this rate cut is another factor that has weighed on the Canadian Dollar, although it’s still holding strong.
On the other hand, the US Dollar (USD) has been struggling due to Trump’s decision to delay tariffs, which has reduced the Greenback's appeal as a safe-haven currency.
As a result, the US Dollar Index (DXY), which tracks the strength of the USD against six major currencies, is struggling to hold above 108.40, which was its low point from Monday.
US Dollar Weakens as Trump Delays Tariff Plans, Boosting Canadian Dollar
On the US front, the broad-based US Dollar (USD) has weakened after President Trump decided to delay his tariff plans on Canada and Mexico for 30 days.
This decision followed an agreement with his North American counterparts to tighten border restrictions aimed at preventing illegal immigration and the flow of fentanyl into the US. As a result, the Canadian Dollar (CAD) has become more attractive, strengthening sharply.
This move also suggests that Trump is using tariffs as a negotiating tool to secure better trade deals, giving the CAD a short-term boost. However, the Canadian Dollar's long-term outlook remains uncertain, as concerns grow that inflation in Canada may fall below the Bank of Canada's (BoC) 2% target.
Meanwhile, the US Dollar's safe-haven appeal has declined, pushing the US Dollar Index (DXY) lower. The DXY, which tracks the value of the USD against six major currencies, is struggling to recover from Monday’s low of 108.40.
Investors are now looking ahead to the US JOLTS Job Openings data for December, set to be released at 15:00 GMT. Economists predict that around 8 million new jobs were posted, slightly fewer than the 8.10 million in November.
This data could provide further insight into the US labor market and the USD's movement against the Canadian Dollar.
USD/CAD – Technical Analysis
The USD/CAD pair is trading at $1.44852, up 0.38%, reflecting a continuation of bullish momentum. The pair is comfortably holding above the key pivot point at $1.44525, signaling sustained buying interest.
Immediate resistance is positioned at $1.45254, with a break above this level potentially accelerating gains toward $1.45906 and $1.46681, the latter marking a significant barrier for bullish extension.
On the downside, immediate support is identified at $1.43820, followed by $1.43175 and $1.42623. A drop below these levels could trigger corrective pullbacks; however, the broader bias remains bullish as long as the pair sustains above the pivot.
The 50-day Exponential Moving Average (EMA) at $1.44369 underpins the bullish outlook, acting as dynamic support.
Additionally, the Relative Strength Index (RSI) remains in neutral-to-bullish territory, suggesting further room for upside before reaching overbought conditions.
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