Fundamental Analysis
During this week, the USD/CAD pair experienced significant volatility due to several key macroeconomic factors. The U.S. dollar faced weakness leading up to the Jackson Hole Symposium, where market participants anticipated dovish signals from the Federal Reserve. Although inflation in the U.S. appeared stable, expectations of a “soft landing” for the economy kept pressure on the dollar, leaving it vulnerable. In Canada, stable oil prices provided some support for the Canadian dollar, as oil remains a critical export for Canada. However, the Canadian economy is facing its own challenges, particularly from slower growth forecasts.
Technical Analysis
The USD/CAD pair was bearish at the start of the week. Resistance was noted around the 1.3700-1.3800 zone, with potential declines targeting support levels near 1.3588. The technical outlook suggested that if the pair broke below the 1.3600 level, it could head toward deeper support around 1.3550, a crucial Fibonacci retracement level. The retail sentiment indicated that most traders were positioned for a weaker U.S. dollar, further reinforcing the bearish technical outlook for USD/CAD.
Outlook
Looking ahead, much depends on the outcome of the Jackson Hole meeting and any guidance on U.S. monetary policy. If the Fed signals a continuation of its cautious approach, the U.S. dollar could weaken further, providing opportunities for the Canadian dollar to strengthen. However, any unexpected hawkish rhetoric could reverse this trend, driving USD/CAD back towards resistance. Monitoring oil prices will also be crucial, as they directly impact the Canadian dollar’s strength.
Thomas is a market analyst and self trader serving the community with his analysis and educational content from long time. The author has great exposure to different financial markets. He’s well-known for his day trading reviews and multiple timeframe analysis.
