The USD/CAD currency pair has experienced selling pressure for a second consecutive day on Friday, lingering around the 1.4175-1.4170 range during the Asian trading session. This positions the pair near a two-week low established the day before. It appears that weekly losses are likely as a number of negative influences suggest further weakening.
The US Dollar (USD) has continued its decline for the third straight day, retreating sharply from its peak since April 2025. Even the neutral comments from US Federal Reserve (Fed) Chair Kevin Warsh have not changed the outlook on monetary policy much. Additionally, falling US bond yields are keeping USD buyers cautious. On the other hand, crude oil prices are stable near a three-week high, which, combined with a more hawkish tone from Bank of Canada (BoC) Governor Tiff Macklem, supports the commodity-sensitive Canadian Dollar (CAD) and places pressure on the USD/CAD pair.
Macklem remarked during the Annual Meetings of the International Monetary Fund and World Bank Group that it’s becoming increasingly difficult to overlook rising energy prices. This could imply that the BoC might take into account raising interest rates instead of lowering them. However, ongoing trade tensions between the US and Canada may deter traders from making strong bullish moves on the CAD. Additionally, there is a growing expectation that the US central bank will once again increase borrowing rates in December, coupled with rising conflicts in the Middle East, which could bolster the USD and impact the USD/CAD pair.
Recent reports on the US Consumer Price Index (CPI) and Producer Price Index (PPI) indicate broader pricing pressures beyond just energy, which supports the idea of more Fed tightening. On the geopolitical side, tensions are heightened with a missile attack by the Iran-backed Houthi group targeting a presidential palace in Aden, Yemen, where the Saudi-backed government operates. Further complications arise from the US-Iran situation in the Strait of Hormuz, likely prompting some buyers to step in for USD and generating caution among USD/CAD bears.
USD/CAD 4-hour chart
Technical Analysis
The USD/CAD pair shows a generally bullish sentiment, staying above the 23.6% Fibonacci retracement level at 1.4173. Moreover, it remains above a cluster of Fibonacci support levels, specifically between the 38.2% retracement at 1.4094 and the 50.0% retracement at 1.4030. The 100-period Exponential Moving Average (EMA) on the 4-hour chart, located at 1.4186, serves as immediate resistance. This indicates the market is finding some upward movement but may struggle to advance significantly unless this resistance is decisively breached.
