The USD/CAD currency pair has been experiencing significant fluctuations, oscillating within a familiar range over the past month. This movement is primarily driven by risk aversion and increased demand for the US Dollar, fueled by ongoing tariff threats from US President Donald Trump. As these economic tensions persist, the path of least resistance for the USD/CAD pair appears to be upward.
Market analysts observe that any corrective pullback in the currency pair could serve as a strategic opportunity for bullish traders. Currently, the USD/CAD is trading near the 1.4400 mark, a level anticipated to offer substantial support. The pair's proximity to the 1.4335 region is also perceived as a potential buying opportunity.
Moreover, the USD/CAD has been hovering around the 1.4300 mark, which acts as a significant barrier against downside movement. Just below this level, the 1.4260 area represents the monthly swing low, providing additional support to the pair's current position.
However, resistance challenges loom ahead for the USD/CAD pair. It faces obstacles near the 1.4465-1.4470 supply zone, a critical resistance level that has historically impeded upward movement. The psychological barrier at the 1.4500 mark also poses a significant hurdle, alongside the multi-year peak at the 1.4515 area. Further up, the round figure of 1.4600 serves as another key resistance level that traders are closely monitoring.
The movement of the USD/CAD pair is also influenced by external factors such as US Treasury bond yields and crude oil prices. Recently, declining US Treasury bond yields have played a role in shaping the pair's dynamics. Concurrently, rising crude oil prices have added another layer of complexity to the currency pair's trajectory.
Since September 2024, the USD/CAD has been on a strong upward trajectory, which market experts categorize as a bullish consolidation phase. This trend suggests a potential continuation of upward momentum, provided certain economic conditions remain favorable.