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USD/CAD Slumps to Six-Month Low as Dollar Buckles Under Political Pressure
Economic
Summary:
The USD/CAD pair slumps to a six-month low near 1.3800 as political tensions in Washington rattle confidence in the U.S. Dollar.
Sell
CLOSEDUSDCAD
End Time
1.38200
Entry Price
1.35000
TP
1.39500
SL
1.39125 -0.00098 -0.07%
88
Points
Profit
1.35000
TP
1.38112
CLOSING
1.38200
Entry Price
1.39500
SL
The U.S. Dollar is under siege. On Monday, the USD/CAD currency pair extended its downside momentum, plunging to a six-month low near the psychologically significant 1.3800 mark during the European session. The move highlights a broader narrative unfolding in currency markets: investors are rapidly losing confidence in the Greenback, as political and institutional instability in Washington compounds fundamental economic concerns.
At the heart of the latest selloff is a growing threat to the Federal Reserve’s independence. Reports have surfaced that U.S. President Donald Trump is weighing the removal of Fed Chair Jerome Powell — a move that has sparked alarm across global markets. Trump's dissatisfaction with Powell stems from the Fed’s refusal to cut interest rates despite persistent political pressure and elevated inflation expectations.
This political interference is shaking the very foundation of the U.S. Dollar’s status as the world’s most trusted reserve currency. The U.S. Dollar Index (DXY), which tracks the performance of the Greenback against a basket of six major peers, has collapsed to a fresh three-year low, trading just above 98.00.
The Dollar’s fall from grace is particularly stark when viewed in the context of Trump’s historically erratic trade policy. Despite recent reassurances from U.S. Commerce Secretary Howard Lutnick, who over the weekend said that “we're confident it will work out with China,” traders remain unconvinced that Washington will deliver a stable and reliable policy path forward. Trump’s oscillating rhetoric on tariffs and trade has not only muddled the macroeconomic outlook but also compromised trust in America’s institutional consistency.
Meanwhile, north of the border, the Canadian Dollar is finding renewed strength, buoyed by fresh domestic optimism. Canadian Prime Minister Mark Carney, who is positioning himself as a fiscal stabilizer in a turbulent North American landscape, announced a plan to implement tax cuts and expand defense spending. These measures are widely viewed as an effort to reduce Canada’s economic reliance on the United States, particularly as the U.S. turns inward under Trump’s protectionist agenda.
Carney’s fiscal stimulus proposals have been well received by investors, as they signal proactive economic management and a strategic pivot away from U.S.-centric trade dependencies. The combination of Canadian policy optimism and U.S. Dollar weakness has created a perfect storm that is driving USD/CAD lower.
Technical Analysis
From a technical perspective, the USD/CAD pair is firmly entrenched in a bearish trajectory on the intraday chart. The pair has decisively broken below the critical 1.3850 support level, a key threshold that previously acted as a springboard for bullish reversals. The break is compounded by sustained price action below the 50-period Exponential Moving Average (EMA50), which continues to apply downward pressure.
Adding to the bearish sentiment, the Relative Strength Index (RSI) has recently exited overbought territory, issuing fresh sell signals that point to continued weakness ahead. Should the pair breach the 1.3600 psychological barrier, the path will likely open toward deeper support at 1.3500, followed by the September 24th low of 1.3430.
TRADE RECOMMENDATION
SELL USDCAD
ENTRY PRICE: 1.3820
STOP LOSS: 1.3950
TAKE PROFIT: 1.3500
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