Key Moments
- USD/CAD trades near 1.3880 after meeting fresh selling interest during the Asian session on Wednesday.
- Trump pauses 50% tariffs on Canada for three days and oil hits a nearly three-week high, supporting the Canadian Dollar.
- Market participants await FOMC Minutes as Fed rate expectations and US data keep the US Dollar recovery in check.
USD/CAD Under Pressure as Loonie Gains Support
The USD/CAD currency pair faced renewed selling during the Asian session on Wednesday, halting its rebound from the lowest level since June 3 reached earlier this week. The pair is trading around the 1.3880 area, with downside moves contained for now as traders look ahead to the upcoming release of FOMC Minutes.
The Canadian Dollar (CAD) is drawing some support after US President Donald Trump announced a three-day pause on 50% tariffs against Canada, following overnight discussions with Canadian Prime Minister Mark Carney. At the same time, crude oil prices advanced to a nearly three-week high amid tensions between the United States and Iran over the Strait of Hormuz. These developments are lending additional strength to the commodity-linked Loonie and putting pressure on USD/CAD.
Dollar Softens as Fed Outlook Remains in Focus
Modest selling in the US Dollar (USD) is contributing to the intraday decline in USD/CAD. Data from the United States released last week indicated easing inflation pressures and a moderation in consumer spending. Those signals have led traders to pare back expectations for an immediate interest rate increase by the US Federal Reserve, restraining the Greenback’s attempt to recover from the two-month low registered on Monday.
At the same time, potential inflation risks tied to higher energy prices could prompt the Fed to lean more hawkishly, helping to keep US bond yields elevated and limiting deeper USD losses. According to CME Group’s FedWatch Tool, market pricing still reflects roughly a 68% probability of a Fed rate hike by year-end. As a result, investors are poised to examine the FOMC Minutes closely for additional insight into the central bank’s policy trajectory, which could be pivotal for the next major move in USD/CAD.
Despite the current consolidation, the underlying backdrop suggests that the bias for the pair remains tilted to the downside. In this context, any short-term recovery in USD/CAD is likely to encounter selling interest rather than marking the start of a sustained uptrend.
Key Technical Levels for USD/CAD
From a technical standpoint, USD/CAD is holding above the 200-day Simple Moving Average (SMA), positioned near 1.3848, indicating that the broader trend tone remains supported for now. A decisive break below this level would open the door toward the next key support in the 1.3820-1.3815 zone, with further weakness potentially driving spot prices under the 1.3800 handle.
On the upside, the first notable resistance is located near 1.3910, which corresponds to the overnight swing high. A sustained move beyond that barrier could encourage additional buying and pave the way for a retest of the psychologically important 1.4000 mark.
| Level | Type | Zone / Value |
|---|---|---|
| 1.4000 | Resistance – psychological | Upside target if 1.3910 breaks |
| 1.3910 | Resistance – swing high | Overnight high and initial cap |
| 1.3880 | Current trading area | Asian session level on Wednesday |
| 1.3848 | Support – 200-day SMA | Key trend indicator on the downside |
| 1.3820-1.3815 | Support zone | Next relevant floor if 200-day SMA breaks |
| 1.3800 | Support – psychological | Potential target on extended decline |
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