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USD/CAD Nears Two-Week Peak as Oil Markets Wobble and Fed Signals Dovish Tilt
Traders' Opinions
Summary:
USD/CAD extended its five-day winning streak above 1.41 as weak oil prices, expectations of another Fed rate cut, and upcoming US–Canada data releases kept traders cautious but broadly supportive of the pair’s upside. Technicals signal room for further gains toward 1.4135–1.4250.
Buy
TradingUSDCAD
EXP
1.41100
Entry Price
1.42500
TP
1.40500
SL
1.40815 -0.00177 -0.13%
0
Point
Flat
1.40500
SL
CLOSING
1.41100
Entry Price
1.42500
TP
The USD/CAD pair maintained a firm bullish tone on Tuesday, holding comfortably above the 1.4100 handle in early European trade as investors positioned cautiously ahead of a heavy macroeconomic calendar in both the United States and Canada. The pair is coming off its strongest weekly performance in more than two weeks, and the underlying fundamental backdrop continues to lean in favour of additional upside.
The Canadian Dollar remains pressured as oil markets struggle to stabilize. Despite a modest rebound on Monday, crude prices quickly ran into fresh selling, weighed down by persistent concerns that global supply will outweigh demand in 2025. Forecasts of rising non-OPEC output, combined with uncertainty over the resilience of global consumption, have revived market fears of a prolonged supply glut. For the commodity-linked Loonie, this backdrop is a clear negative. Each failed recovery attempt in crude reinforces the vulnerability of Canada’s terms of trade, amplifying upward pressure on USD/CAD.
The US Dollar, meanwhile, continues to benefit from steady underlying demand, even as expectations grow that the Federal Reserve may deliver another rate cut in December. Comments from several influential FOMC policymakers last week signaled increased willingness to ease policy further, citing softening economic momentum and early signs of cooling in the labour market. While these dovish expectations have limited the USD’s ability to break dramatically higher, they have not been enough to offset the broader risk-off undertone that keeps safe-haven flows alive.
For USD/CAD, the interplay is nuanced: the Fed’s potential easing path limits the USD’s top-side momentum on a broad basis, but the Loonie’s oil-driven weakness and relative macro uncertainty in Canada keep the pair supported.
Market participants are also displaying clear hesitation ahead of a dense series of economic releases. With volatility expected to rise, traders are avoiding large directional bets until they have better clarity on the health of both economies.
A delayed batch of US data kicks off the week’s momentum drivers. The Producer Price Index (PPI) and Retail Sales—initially postponed—will offer the first major clues regarding inflation dynamics and consumer demand. They will be followed by Pending Home Sales and the Richmond Fed Manufacturing Index, providing deeper insight into the cyclical sectors most sensitive to high borrowing costs.
Later in the week, the focus shifts toward Thursday’s Durable Goods Orders, a key barometer of corporate investment appetite, before attention turns north of the border. Canada’s monthly GDP print, scheduled for Friday, could be pivotal. Any indication that growth continues to underperform expectations would reinforce speculation that the Bank of Canada may need to maintain an easier policy stance for longer—another scenario favourable to upside pressure on USD/CAD.
Technical Analysis 
USD/CAD’s technical posture remains decisively bullish. The pair continued its upward climb in recent sessions, bolstered by strong support along its rising trendline and consistent buying interest above the 50-day exponential moving average (EMA50). The market structure on shorter timeframes reveals a clean sequence of higher lows, underscoring the dominance of the prevailing uptrend.
Momentum indicators further validate the bullish case. Relative strength metrics, which recently retreated from overbought territory, are now flashing fresh positive signals following a correction phase—often a constructive sign that buyers are regaining control.
Initial resistance stands near 1.4135, a level expected to serve as the first upside objective for bulls. A decisive break above this zone could unlock further gains toward 1.4200, where psychological resistance converges with previous swing highs. Beyond that, 1.4250 emerges as the next medium-term bullish target, particularly if fundamentals continue leaning in favour of USD strength and oil-linked weakness in the Canadian Dollar.
TRADE RECOMMENDATION
BUY USDCAD
ENTRY PRICE: 1.4110
STOP LOSS: 1.4050
TAKE PROFIT: 1.4250
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