Usdcad Returns Higher

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Usdcad Returns Higher

Usd/Cad Returns Back Above 1.3730, More Upside Ahead

USD/CAD has attracted buyers after going through a dip on the first trading day of the week. While the USD/CAD appears to be green, the momentum isn't sufficient and lacks any follow-through.

For now, the USD/CAD remains stuck in a familiar trading range that formed in the last week. For now, the USD/CAD is trading above 1.3740 with a 0.10% gain for the day.

When we talk about the Canadian dollar, it is impossible to leave out crude oil as they are connected to each other. On Monday, a slight weakness was seen in the crude oil prices due to lower US consumer demand. That's one of the reasons why the CAD is on the backfoot against the USD.

Usd Trades At Monthly Highs

And if we look at the US Dollar, it is now sitting at its highest level since May 2024 after the Fed's hawkish surprise as there will be just 1 rate cut this year. So that's also yet another reason why the USD/CAD is rushing higher.

Meanwhile, the US producer and consumer prices were released last week, which showed weakness as inflation cooled down. Similarly, the US import prices have gone up, which supports the case of higher domestic inflation. When we combine it with a drop in the US consumer sentiment, it means the September rate cut is no longer possible.

That's why it is safe to wait for a follow-through buying momentum in the USD/CAD as the pair is under the influence of diverging forces.

The technical chart (D1) of USD/CAD shows that 1.3691 is an important support as that's where the 20 SMA is located. Similarly, the 50 SMA is near 1.3691 while the 100 SMA is seen at 1.3604.

The 100 and the 200 SMA are seen at 1.3604 and 1.3581, respectively with very little difference between them. The 100 SMA is above the 200 SMA which is a sign that USD/CAD is bullish in the long-term as well.

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