Key Moments
- USD/CAD climbed to a fresh five-week high near 1.4000 in Asian trading, with the pair last seen around 1.3992.
- The Federal Reserve raised its policy rate by 25 bps to 3.75%-4.00%, prompting traders to increase expectations for further tightening.
- Oil’s inability to hold above $100 has reduced support for the Canadian Dollar, a currency tied closely to energy exports.
Fed-Driven USD Rally Pressures Canadian Dollar
The Canadian Dollar is trading under sustained pressure against the US Dollar on Thursday, with USD/CAD extending gains after the latest Federal Reserve policy decision. During the Asian session, the pair pushed to a new five-week peak near the 1.4000 mark as US Dollar strength dominated price action.
The advance in USD/CAD reflects a broader bid for the Greenback following Wednesday’s Federal Open Market Committee outcome. As of writing, the US Dollar Index (DXY) – which tracks the currency against six major peers – is holding firm close to Thursday’s intraday high around 100.33.
Hawkish Fed Tone Lifts Rate-Hike Expectations
At its policy meeting, the Federal Reserve increased the federal funds rate by 25 basis points to a target range of 3.75%-4.00%, in line with market forecasts, after leaving rates unchanged through the previous five meetings.
Market participants have reinforced their hawkish outlook on the Fed following comments from Chairman Kevin Warsh, who highlighted that price pressures remain significantly elevated for an extended period. However, he did not provide explicit forward guidance on the future path of policy, which was in line with expectations.
According to the CME FedWatch tool, the probability that the Fed will deliver at least two additional rate hikes by year-end has risen to 88.7%, compared with 79% before the announcement. This repricing has further supported the US Dollar against the Canadian Dollar and other major currencies.
US Dollar Performance Against Majors
The article notes that the US Dollar was the strongest this week against the New Zealand Dollar. A heat map referenced in the original content illustrates percentage changes between major currencies, using the base currency from the left column and the quote currency from the top row. For instance, moving from the US Dollar on the left to the Japanese Yen on the top would show the performance of USD (base)/JPY (quote).
| Reference | Detail |
|---|---|
| US Dollar Index (DXY) | Trading near Thursday’s high around 100.33 |
| Strongest USD move this week | Against the New Zealand Dollar |
Oil Rally Stalls, Undermining CAD Support
On the Canadian side, the pause in the recent oil price advance is also weighing on the currency. Crude prices are struggling to maintain levels above $100, which is eroding some of the typical support for currencies from net energy-exporting economies such as Canada.
USD/CAD Technical Picture
On the daily chart, USD/CAD is trading at 1.3992. The pair remains above the 20-period Exponential Moving Average (EMA) at 1.3890, keeping the short-term outlook tilted to the upside. Price also sits above a dense Fibonacci support zone, including the 38.2% retracement at 1.3980 and the 50.0% retracement at 1.3898.
The Relative Strength Index (14) stands at 61.2, indicating firm but not overextended bullish momentum. This suggests buyers retain control as the latest rebound continues to move away from recent lows.
| Level Type | Price | Comment |
|---|---|---|
| Spot price | 1.3992 | Current daily chart level |
| 20-period EMA | 1.3890 | Key moving-average support |
| 38.2% Fibonacci support | 1.3980 | Immediate support area |
| 50.0% Fibonacci support | 1.3898 | Secondary support |
| 61.8% Fibonacci support | 1.3816 | Deeper support zone |
| 78.6% Fibonacci support | 1.3699 | Lower support cushion |
| 23.6% Fibonacci resistance | 1.4082 | Initial topside barrier |
| Cycle high reference | 1.4247 | Break above would signal a more extended bullish phase |
| RSI (14) | 61.2 | Reflects firm bullish momentum |
On the downside, immediate support is concentrated at the 38.2% Fibonacci retracement at 1.3980, followed by the 50.0% level at 1.3898 and the 20-period EMA at 1.3890. Additional downside protection is located at the 61.8% retracement at 1.3816 and the 78.6% retracement at 1.3699.
On the topside, initial resistance is seen at the 23.6% Fibonacci retracement at 1.4082. Above that, the cycle high near 1.4247 is identified as a key reference area, where a decisive break would be required to open the door to a more extended bullish phase in USD/CAD.
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