USD/CAD Price Analysis – April 22, 2025
Daily Price Outlook
During the European trading session, the USD/CAD currency pair has continued to move lower for the second day in a row, trading close to 1.3810 on Tuesday. However, the Canadian Dollar (CAD) has been strengthening, mainly due to a rebound in crude oil prices and positive economic factors supporting the currency.
CAD Strengthened by WTI Oil Rebound and Increased Canadian Oil Exports to China
However, the recent strength of the Canadian Dollar (CAD) is mainly driven by the rebound in West Texas Intermediate (WTI) oil prices, which bounced back from a recent sell-off and are now trading around $63.30 per barrel. This rise has led investors to cover their short positions, adding to the upward momentum of the CAD.
Moreover, a significant shift in global oil trade is contributing to the CAD’s strength. China has drastically reduced its US oil imports by 90%, redirecting more than a quarter of its seaborne oil demand to Canada through the new Alberta–Vancouver pipeline. This move has boosted Canada's oil export revenues, providing further support to the CAD.
BoC's Steady Rate Decision and Its Impact on CAD Stability Amid US Tariff Risks
On the flip side, the Bank of Canada's (BoC) recent decision to hold its policy rate steady at 2.75% has added further stability to the Canadian Dollar. While the central bank acknowledged an uncertain US tariff outlook, it maintained a cautious optimism that stable growth with near-target inflation remains possible.
However, escalating US tariffs could trigger recessionary pressures and rising inflation in Canada, posing risks to the CAD in the medium term. Nevertheless, the current policy stance has helped keep the CAD resilient in the face of broader market uncertainty.
USD Under Pressure Amid US Political Uncertainty and Trade Tensions with China
On the US front, the US Dollar (USD) remains under pressure, weighed down by heightened political and economic uncertainty in the United States. Investor sentiment has been fragile amid ongoing global trade tensions, particularly with China, as US President Trump faces mounting challenges with his tariff strategies.
Adding to this uncertainty, Trump's proposal to investigate critical mineral imports has raised concerns about slower US growth and potential inflationary risks, further putting the USD on the defensive.
USD/CAD – Technical Analysis
USD/CAD remains under sustained bearish pressure, trading below a descending trendline and the 50-period SMA, currently at 1.3851. The pair is forming lower highs and lower lows, reinforcing the downtrend.
A fresh rejection from the 1.3850–1.3863 supply zone suggests sellers remain in control, and momentum favors a continuation lower if 1.3819 is breached.
A bearish engulfing candlestick appeared near the trendline resistance during the latest rejection, signaling increased selling interest at higher levels.
This pattern adds confluence to the bearish outlook, particularly as price action remains beneath both the 50-SMA and the trendline.
The RSI stands at 36 and is sloping lower, showing weakening bullish attempts and renewed bearish momentum.
The entry trigger sits just below 1.3819, with the next support at 1.3742, followed by 1.3704. A close above 1.3863 would invalidate this setup and potentially shift sentiment in the short term.
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