- USD/CAD juggles near Friday’s low around 1.3650 as trading volume is low due to holiday in US markets.
- Traders pare bets supporting Fed rate cuts in September.
- The BoC is widely anticipated to start reducing interest rates from June.
The USD/CAD pair trades in a narrow range near Friday’s low around 1.3650 in Monday’s European session. The Loonie asset is on the backfoot as the US Dollar faces selling pressure in a thin trading volume session as the United States (US) markets are closed on account of Memorial Day.
The US Dollar could bounce back as investors worry that the Federal Reserve (Fed) will not return to policy normalization before the last quarter of this year. The CME FedWatch tool shows that probability for interest rates remaining steady at their current levels after the September meeting has increased to 51% from 38% recorded last week.
Also, Fed policymakers continue to maintain a hawkish guidance on interest rates as they believe that one-time decline in the inflation data as recorded for April is insufficient to get confidence that the progress in the disinflation process has resumed.
Meanwhile, the Canadian Dollar could come under pressure as investors expect that the Bank of Canada (BoC) will start reducing interest rates from the June meeting. Canada’s weak Retail Sales and consistently declining price pressures have prompted expectations for BoC rate-cuts in June.
USD/CAD trades in a Descending Triangle chart formation on a daily timeframe, which exhibits a sharp volatility contraction. The downward-sloping border of the above-mentioned chart pattern is plotted from April 16 high at 1.3846 while the horizontal support is marked from March 25 high near 1.3570.
The Loonie asset remains sticky to the 20-day Exponential Moving Average (EMA) near 1.3670, suggesting a sideways trend.
The 14-period Relative Strength Index (RSI) oscillates in the 40.00-60.00 range, indicating indecisiveness among market participants.
Fresh buying opportunity would emerge if the asset breaks above April 30 high at 1.3785. This would drive the asset towards April 17 high at 1.3838, followed by the round-level resistance of 1.3900.
In an alternate scenario, a breakdown below May 3 low around 1.3600 will expose the asset to the April 9 low around 1.3547 and the psychological support of 1.3500.
USD/CAD daily chart
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 bounces off lows, retests 1.1370
Following an early drop to the vicinity of 1.1310, EUR/USD now manages to regain pace and retargets the 1.1370-1.1380 band on the back of a tepid knee-jerk in the US Dollar, always amid growing optimism over a potential de-escalation in the US-China trade war.
GBP/USD trades slightly on the defensive in the low-1.3300s
GBP/USD remains under a mild selling pressure just above 1.3300 on Friday, despite firmer-than-expected UK Retail Sales. The pair is weighed down by a renewed buying interest in the Greenback, bolstered by fresh headlines suggesting a softening in the rhetoric surrounding the US-China trade conflict.
Gold remains offered below $3,300
Gold reversed Thursday’s rebound and slipped toward the $3,260 area per troy ounce at the end of the week in response to further improvement in the market sentiment, which was in turn underpinned by hopes of positive developments around the US-China trade crisis.
Ethereum: Accumulation addresses grab 1.11 million ETH as bullish momentum rises
Ethereum saw a 1% decline on Friday as sellers dominated exchange activity in the past 24 hours. Despite the recent selling, increased inflows into accumulation addresses and declining net taker volume show a gradual return of bullish momentum.
Week ahead: US GDP, inflation and jobs in focus amid tariff mess – BoJ meets
Barrage of US data to shed light on US economy as tariff war heats up. GDP, PCE inflation and nonfarm payrolls reports to headline the week. Bank of Japan to hold rates but may downgrade growth outlook. Eurozone and Australian CPI also on the agenda, Canadians go to the polls.
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.