FX.co ★ USD/CAD

The spot price experienced broad weakness on Monday, trading around the 1.3619 region, with a decline across most major currencies. However, it managed to rise by one-third of one percent against the weakening US Dollar (USD). The market remains relatively subdued as investors gear up for the highly anticipated Jackson Hole Economic Symposium, which will take place later this week. Global Tensions and US Rate Cut Hopes Fuel Crude Oil Prices: The backdrop of concerns over potential conflict in the Middle East has added to market uncertainty. At the same time, hopes that US rate cuts may stimulate economic activity and fuel consumption have provided a boost to oil prices, a key factor for the Canadian Dollar, given Canada’s status as a major oil exporter. Despite this, fears of slowing global demand could limit gains in crude oil prices, which might cap the CAD’s strength. Rate Cut Speculations Affecting the Canadian Dollar: The Canadian Dollar (CAD) is currently under pressure due to expectations of a 25 basis point rate cut by the Bank of Canada (BoC) in September. While a weaker US Dollar (USD) is providing some support, the potential for rate cuts may limit the CAD's ability to gain significantly against other currencies. As a result, the USD/CAD pair has seen limited losses, despite the overall weakness in the US Dollar. H4 Chart USD/CAD Rallies Despite Weak US Dollar: The pair has managed to climb above the 1.3600 level, testing three-week highs near 1.3640. The pair has spent much of the past few weeks in negative territory, dropping 3.5% from early August’s peak near 1.3951. This suggests that, while the CAD is under pressure, the USD’s broader struggles are allowing the Canadian currency to hold its ground in this particular pairing.

D1 Chart RSI Signals Overbought Conditions for USD/CAD: Traders should approach the current market with caution, as the Relative Strength Index (RSI) for the USD/CAD pair is showing oversold conditions. While the RSI indicates potential for a rebound, it can remain oversold for extended periods during downtrends, and prices could continue to fall. As a result, traders are advised against adding to their short positions, but it’s also too early to exit positions, as there’s no clear sign of a reversal.

Oil Prices Continue to Climb, Boosting CAD’s Prospects: The price is currently under pressure due to expectations of a 25 basis point rate cut by the BoC in September. However, the commodity-linked CAD is receiving support from rising crude oil prices. West Texas Intermediate (WTI) is trading near $76.60 per barrel, boosted by positive US economic data indicating stronger demand in the world's largest oil consumer. As Canada is a major crude exporter to the US, higher oil prices generally benefit the Canadian economy and support its currency.