FX.co ★ USD/CAD

USD/CAD is trading lower at 1.4181 in Wednesday's session. The recovery in crude oil prices is providing some support to the CAD, a commodity currency, as it appreciates against the USD. Investors are now looking to the ADP employment and PCE Price Index figures to be released later today, which may provide further insight into the future direction of USD rates. Crude oil prices rise as US President Donald Trump denies in public the Axios news reports that claim he has offered sanctions relief to Iran and released frozen assets of Iran in return for concrete steps from Iran regarding its nuclear program. Canada is one of the largest crude oil exporters, and any rise in crude oil prices is generally positive for the CAD. Hawkish remarks from Fed members may support the dollar. The market is currently discounting the chances of a Fed rate hike next month at nearly 47.1%, while there is a 92.5% probability that the Fed will raise rates in December. NBC analysts have observed that “this morning’s GDP report shows that economic recovery in Canada has lost some steam in the third quarter,” although Canada’s Statistics Bureau preliminary data show “an increase in GDP by 0.2% in August.” The analysts suggest that “the continuing expansion will make it easier for the Bank of Canada to handle the issue of whether the economy can cope with the tension resulting from trade relations, which have become quite tough lately.” But as NBC points out, “despite this resiliency and the fact that it has enabled the Bank of Canada to be patient amid the oil shock,” this patience “may not last much longer in the fourth quarter.” Williams of the Fed takes a moderately hawkish tone, scoring 6.4 on FXS Speechtracker compared to the historical average of 6.2, implying no change in tone. The focus on “no need for urgency” after the September rate increase, and the indication that another increase will be made if the economy performs as expected, suggest data dependency. However, the goal remains to bring inflation to 2% before it becomes ingrained in the economy. The current strength of the US economy, the expected path for inflation to return to target only by 2028, and worries about investment pressure from AI support a hawkish view that is positive for the dollar. The FXS Fed Sentiment Index has fallen by 1.43 to 144.29, suggesting a slight reduction in perceived hawkishness; even so, the speech still scores above the neutral 100 level. The setup implies the Fed is still a hawk, but less urgently than before, which could negatively impact the dollar's upside.

In the intraday chart, USD/CAD continues to gain strength well above the 20-day Bollinger middle band and the 100-day MA, thereby providing a very positive near-term setup. The price is now testing the upper portion of the Bollinger band. In contrast, the upper band is the next hurdle, with the RSI (14) at 74 suggesting an overbought condition and continued upward momentum. From the bulls' perspective, initial resistance comes at the 20-day Bollinger upper band near 1.4260, and any reversal there could signal a pause in the current up-move. A move past this level could set the stage for an upside test towards the highs of April 1, 2025, near 1.4415 and March 3, 2025, near 1.4541. On the downside, initial support is at the September 25 low of 1.4133. Key contention levels to watch are the 1.4000 psychological level and the 100-day MA at 1.3980. A deeper corrective slide exposes the lower Bollinger Band near 1.3695 as a more distant structural floor.