The USD/CAD pair remained steady above 1.4150 on Wednesday as investors awaited key US PMI data, which could provide fresh direction for the currency market. The US dollar maintained its strength amid expectations that the Federal Reserve will keep rates higher for longer, while the Canadian dollar struggled to find momentum.
Market participants are closely watching the US PMI figures, as stronger-than-expected data could reinforce the Fed’s hawkish stance, boosting the greenback. Conversely, signs of economic weakness may increase speculation about future rate cuts, potentially weighing on the dollar.
The Canadian dollar faced headwinds from softer oil prices, which limited its ability to gain ground against the USD. Crude oil, a key driver for the loonie, has struggled to sustain recent gains as demand concerns persist, keeping pressure on commodity-linked currencies.
Despite the US dollar’s resilience, traders remain cautious ahead of upcoming economic data, which could trigger volatility in USD/CAD. The Federal Reserve’s stance on inflation and growth remains a key factor, with any dovish signals likely to ease pressure on the Canadian dollar.
Meanwhile, the Bank of Canada’s policy outlook remains uncertain, as policymakers balance persistent inflation concerns with signs of economic slowdown. Any shifts in rate expectations could influence the pair’s direction in the near term.
With US PMI data and oil market movements in focus, traders will be watching for any signs that could drive fresh momentum in USD/CAD. A strong US reading could push the pair higher, while weaker data may open the door for a pullback.
