The USD/CAD pair extended its gains, climbing toward 1.4350 as escalating trade war tensions prompted a surge in demand for the US dollar. Investors flocked to the greenback amid fears of global economic disruptions, driven by deteriorating trade relations between major economies. The uncertainty surrounding trade policies has led to increased risk aversion, pushing the US dollar higher.
Weaker commodity prices have put additional pressure on the Canadian dollar, which is heavily reliant on exports, especially crude oil. As falling oil prices exacerbate concerns over Canada’s economic growth, the loonie has struggled to regain strength. With crude oil prices dipping, the Canadian dollar has faced increased difficulty in attempting any significant recovery.
Meanwhile, the US dollar remains firm, supported by broader market risk aversion and expectations that the Federal Reserve will continue its policy of higher interest rates. As the US economy shows signs of resilience, particularly in terms of consumer spending and job growth, the greenback remains an attractive investment. Should US economic data continue to outperform, the dollar could remain well-supported, keeping the USD/CAD pair elevated.
Technical indicators suggest that USD/CAD may test higher resistance levels, with the next significant hurdle near 1.4400. If the current momentum continues, the pair could see further upside in the coming sessions. However, with the global economic landscape in flux, any improvement in risk sentiment or a rebound in oil prices could potentially provide some relief for the Canadian dollar.
The outlook for USD/CAD remains volatile, with ongoing trade war developments and fluctuations in commodity markets likely to drive price action. Traders will need to stay alert to any news regarding trade policies, as well as shifts in crude oil prices, which could affect the Canadian dollar’s performance.
Looking ahead, analysts anticipate that the pair will remain influenced by geopolitical risks and economic data. Economic releases from both the US and Canada will be closely scrutinized for insights into the future direction of the currency pair. If trade tensions continue to weigh on market sentiment, the US dollar could see further support, keeping the Canadian dollar under pressure.
