Daily Price Outlook
During the European trading session, the USD/CAD currency pair remained flat near the 1.4179 level despite mild strength in the US dollar. However, the US Dollar Index (DXY) traded sideways, as the US markets saw inactivity due to Washington's Day holiday.
Traders are awaiting crucial data later in the week, particularly the Canadian Consumer Price Index (CPI) inflation figures due for release on Tuesday, which could influence the Canadian Dollar (CAD) outlook.
US Dollar Supported by Tariff Threats but Limited by Holiday Volatility
On the US front, the strength of the US dollar continued to make an impact, as President Donald Trump reiterated his threat of tariffs, with taxes on autos expected to take effect by April 2. This announcement followed a series of trade measures initiated by the president during his second term.
While such threats typically strengthen the US Dollar, the lack of market activity due to the Washington's Day holiday capped the upside momentum. Investors are closely monitoring potential tariff developments, as an escalation in trade tensions could further bolster the USD against the Canadian Dollar.
Canadian CPI Data in Focus, Loonie Could Face Pressure
In Canada, all eyes are on the upcoming CPI data for January, expected to show a year-over-year increase of 1.8%. On a monthly basis, CPI is forecast to rise by 0.1%, following a decline of 0.4% in December. If inflation comes in softer than expected, the Canadian dollar could face pressure, potentially supporting a rise in the USD/CAD pair.
However, the positive impact of rising crude oil prices on the CAD cannot be overlooked. As the largest oil exporter to the US, Canada stands to benefit from higher oil prices, which could limit losses for the loonie.
Despite the renewed strength in the US dollar, the USD/CAD pair remains relatively stagnant as traders balance the economic data from both countries and monitor developments on the global trade front. With CPI data and oil prices in focus, the pair’s next move could depend heavily on the outcome of these factors.
USD/CAD – Technical Analysis
The USD/CAD pair is trading at $1.42072, edging lower by 0.01% as traders assess key technical levels. The pair is hovering near its pivot point at $1.41803, suggesting a neutral to slightly bullish bias in the near term.
The 50-day EMA at $1.42724 is acting as overhead resistance, capping upside potential, while immediate support at $1.41257 remains intact.
On the upside, a break above $1.42450 could signal further gains, targeting resistance at $1.43035 and potentially extending toward $1.43614 if bullish momentum persists.
Conversely, a drop below $1.41257 may expose USD/CAD to further downside risks, with the next key supports at $1.40774 and $1.40203.
From a technical standpoint, the market remains in a consolidation phase, oscillating between well-defined support and resistance levels.
A decisive breakout above $1.42450 could confirm bullish momentum, while failure to hold above $1.41803 may tilt the bias in favor of sellers.
The 50-day EMA at $1.42724 serves as a key barrier, with a sustained break above it needed for a more definitive bullish confirmation.
Given the current setup, traders should watch for a breakout confirmation above resistance or a move below support to establish the next directional trend.
With USD/CAD trading near its pivot level, price action in the coming sessions will likely dictate market sentiment.
Related News
- GOLD Price Analysis – Feb 18, 2025
JOIN LHFX TODAY
24/7 live support, lightning fast withdrawals, guaranteed safe and reliable trading platforms with a true ECN broker.