FX.co ★ USD/CAD

The USD/CAD pair continues to trade lower for the second consecutive day on Friday, currently near the 1.4175-1.4170 levels and near the two-week low it touched the previous day. Spot prices are set to end the week lower, supported by several negative fundamentals. The US Dollar (USD) continues its strong pullback from its best level since April 2025 for the third successive session and finds no relief from neutral comments by Fed Chair Kevin Warsh that did not affect the policy outlook. However, falling US bond yields are working against USD buyers. Meanwhile, oil prices remain unchanged near their three-week highs, and, coupled with hawkish commentary from BoC Governor Tiff Macklem, the commodity-sensitive Loonie is providing support to the USD/CAD pair. Macklem said at the Annual Meetings of the International Monetary Fund and World Bank Group that energy prices are unlikely to rise much longer. This suggests the BoC is more likely to raise interest rates than lower them. Nevertheless, US-Canada trade issues may keep traders from making aggressive CAD purchases. In addition, rising conviction about another interest rate hike by the US central bank in December, along with escalating Middle East tensions, can strengthen the buck and the USD/CAD pair. The recent US CPI and PPI releases were also red hot. They indicated widening pressures outside the energy sector, which could support further tightening by the Federal Reserve in the coming periods. From the political side, the Iran-backed Houthi fighters conducted a lethal attack on the presidential palace in Aden city, where the Saudi-backed and recognized Yemeni government operates. Furthermore, tensions between the US and Iran in the Strait of Hormuz support a case for some USD dip-buying. The USD/CAD cross remains bullish as long as it holds above 1.4173, the 23.6% Fibonacci retracement level. Price also remains above a cluster of hidden Fibonacci levels, ranging from the 38.2% retracement of 1.4094 to the 50.0% retracement of 1.4030. At the same time, the 100-period EMA on the four-hour chart, at 1.4186, now serves as near-term resistance.