The USD/CAD pair eased slightly from its highest level since March 2020, pulling back to around the 1.4430 mark. The currency pair had surged earlier in the session, driven by strong U.S. Dollar strength and oil price fluctuations, with the greenback benefiting from hawkish Federal Reserve signals. The pullback reflects profit-taking and some market correction following recent upward momentum.
The Canadian Dollar faced persistent pressure, weighed down by the continued volatility in oil markets, where fluctuations in crude prices often influence the loonie. As oil prices showed some signs of recovery, this slightly mitigated the downward pressure on the CAD, but investor sentiment remains cautious in light of concerns about potential U.S. recession risks and global growth challenges.
Despite the minor retreat, the USD/CAD pair remains near multi-year highs, driven by market speculation about Fed policies diverging from those of the Bank of Canada (BoC). This disparity is expected to continue influencing the currency pair’s direction, with further strength in U.S. yields likely to keep supporting the greenback.
The focus is now on economic data from both the U.S. and Canada, especially inflation reports and potential central bank actions. If the trend of U.S. economic resilience continues, the USD/CAD pair could remain well-supported, maintaining its elevated range for the foreseeable future.
