USD/CAD Extends Rally as Fed Hike Expectations Lift Dollar

Key Moments

USD/CAD trades near 1.4190 as the US Dollar advances and outperforms major peers.
Markets price in two additional Federal Reserve rate hikes this year, with a 60% probability of a 0.25% move at each remaining meeting.
Traders await Canadian July GDP and US August JOLTS data, with consensus pointing to flat Canadian output after June’s 0.3% gain.

Dollar Strength Drives USD/CAD Higher

The USD/CAD pair is trading around 1.4190 during the European session on Tuesday, with the US Dollar gaining approximately 0.12%. The move reflects renewed strength in the Greenback as expectations firm that the Federal Reserve will implement two additional interest rate increases before year-end.

According to the latest pricing from the CME FedWatch tool, there is a 60% implied probability that the Fed will raise rates by a quarter of a percentage point at each of its two remaining policy meetings this year.

US Dollar Performance vs Major Currencies

The US Dollar Index (DXY) is up 0.16%, trading close to 101.35, underscoring broad-based USD strength. On the day, the US currency has been strongest against the Australian Dollar.

US Dollar Price Today

The table below summarizes the described performance of the US Dollar against major counterparts as referenced in the article narrative.

Metric	Value / Description
USD/CAD spot level	1.4190
US Dollar Index (DXY)	0.16% higher, near 101.35
Strongest performance	Against the Australian Dollar

The referenced heat map compares percentage moves among major currencies, with the base selected from the left column and the quote from the top row. For instance, selecting the US Dollar on the left and the Japanese Yen along the top shows the percentage change for USD (base)/JPY (quote).

Key Data in Focus: Canada GDP and US JOLTS

Later in the session, attention turns to incoming macroeconomic releases from both Canada and the United States.

Canada GDP (July, MoM) – Economists anticipate that monthly Canadian Gross Domestic Product will be unchanged following a 0.3% increase in June.
US JOLTS Job Openings (August) – The US Job Openings and Labor Turnover Survey is expected to show 7.23 million new job postings, slightly below the 7.271 million reported for July.

USD/CAD Technical Setup

On the daily chart, USD/CAD is trading at 1.4190, extending its climb well above the 20-period exponential moving average (EMA), which stands at 1.4016. This configuration supports a constructive near-term outlook for the pair.

Momentum indicators point to stretched conditions. The 14-period Relative Strength Index (RSI) is at 75.45, signaling overbought territory. This indicates that buyers maintain control, but it also increases the likelihood of a corrective pullback as price moves further away from dynamic support.

On the downside, immediate support is seen near the 20-period EMA around 1.4020. A retreat toward this zone could attract fresh buying interest and help maintain the broader bullish structure, provided that the pair holds above this level. With no specific resistance levels identified in the available data, any additional upside is expected to be driven primarily by momentum. However, the elevated RSI suggests that further gains could unfold more slowly and may be interspersed with brief consolidation phases.

Economic Indicator Focus: Canadian GDP (MoM)

The Gross Domestic Product (GDP), published by Statistics Canada on both monthly and quarterly bases, measures the total value of goods and services produced in Canada over a given period. It is regarded as the primary gauge of overall Canadian economic activity.

The month-over-month (MoM) figure compares economic output in the reference month with that of the previous month. In general, a stronger-than-expected GDP reading is considered supportive for the Canadian Dollar (CAD), while a weaker outcome tends to be negative for the currency.