- USD/CAD lacks firm intraday direction and consolidates below the YTD top set on Thursday.
- An uptick in Oil prices underpins the Loonie and caps the upside amid subdued USD demand.
- Reduced Fed rate cut bets favors USD bulls and support prospects for further near-term gains.
The USD/CAD pair oscillates in a narrow trading band during the Asian session on Friday and for now, seems to have stalled the previous day's late pullback from its highest level since November 22. Spot prices currently trade just below the 1.3700 mark, nearly unchanged for the day, though this week's breakout through the 1.3600-1.3610 supply zone favors bulls and supports prospects for a further near-term appreciating move.
Crude Oil prices edge higher amid heightened tensions in the Middle East on the back of a possible Iranian retaliation over a suspected Israeli strike on its embassy in Syria. This, in turn, is seen underpinning the commodity-linked Loonie, which, along with subdued US Dollar (USD) price action, acts as a headwind for the USD/CAD pair. That said, jitters about growing non-OPEC output, led by the US, might cap gains for the black liquid. Apart from this, expectations that the Federal Reserve (Fed) may delay cutting interest rates favor the USD bulls and should limit the downside for the currency pair.
The hotter-than-expected US consumer inflation figures released on Wednesday forced investors to push back their expectations about the timing of the first interest rate cut by the Fed to September from June. Investors also pared their bets for the number of rate cuts of 25 basis points (bps) this year to fewer than two, or roughly 42 bps, from about three or four a few weeks ago. This remains supportive of elevated US Treasury bond yields and assists the USD to stand tall near its highest level since November touched on Thursday, validating the near-term positive outlook for the USD/CAD pair.
Even from a technical perspective, the post-US CPI strength above the 1.3600-1.3610 barrier and the subsequent move up suggests that the path of least resistance for spot prices is to the upside. Market participants now look to the release of the Preliminary Michigan Consumer Sentiment Index, due later during the North American session. Apart from this, speeches by FOMC members will drive the USD demand. This, along with Oil price dynamics, should produce short-term trading opportunities around the USD/CAD pair, which seems poised to register gains for the second straight week.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD extends losses to near 1.0900 as Fed decision looms
EUR/USD extends the drop to test 1.0900 in European trading on Wednesday, pressured by a decent US Dollar recovery. Traders resort to position adjustment, lifting the Greenback ahead of the US Federal Reserve interest rate decision.
Gold pauses near all-time peak amid US Dollar recovery, Fed eyed
Gold price struggles to capitalize on the Asian session uptick to the $3.045 area or a fresh all-time peak as bulls pause for a breather and opt to wait for the outcome of a two-day FOMC meeting before placing any directional bets on the bullion.
USD/JPY falls back toward 149.50 after BoJ Ueda's presser
USD/JPY faces rejection at 150.00 and turns lower toward 149.50 in the European session as traders assess BoJ Governor Ueda'a comments. Earlier in the day, the BoJ announced that it left monetary policy settings unchanged, as anticipated. All eyes are now on the Fed outcome.
XRP battles key trendline support as long-term holders continue holding onto large profits
XRP futures open interest has remained largely flat since the market crash in early February. The remittance-based token has shed 33% of its OI between February 1 and March 18, per Coinglass data.
Tariff wars are stories that usually end badly
In a 1933 article on national self-sufficiency1, British economist John Maynard Keynes advised “those who seek to disembarrass a country from its entanglements” to be “very slow and wary” and illustrated his point with the following image: “It should not be a matter of tearing up roots but of slowly training a plant to grow in a different direction”.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.