The USD/CAD pair remains under pressure, struggling to gain momentum below 1.4200, as traders weigh economic uncertainties and shifting market dynamics. The currency pair is hovering near the lower boundary of a falling wedge formation, signaling a potential breakout, but persistent dollar weakness and resilience in the Canadian dollar have kept upside attempts in check.
The U.S. dollar’s struggles come as investors reassess Federal Reserve policy expectations, with concerns that rate cuts may arrive later than previously anticipated. While U.S. economic data has shown resilience, recent softness in yields and cautious Fed commentary have capped dollar strength, making it harder for USD/CAD to push higher.
Meanwhile, the Canadian dollar has found support from stronger oil prices, with crude stabilizing amid supply concerns and geopolitical tensions. Given Canada’s reliance on energy exports, rising oil prices have helped limit USD/CAD’s upside, reinforcing the pair’s current downward bias.
From a technical perspective, the falling wedge pattern suggests a potential reversal, but the pair must break decisively above resistance to confirm a bullish move. Until then, sellers remain in control, and a sustained move below the lower boundary could trigger further downside pressure.
USD/CAD 1-D Chart as of February 14, 2025 (Source: TradingView)
Traders are keeping a close eye on upcoming U.S. and Canadian economic data, which could provide fresh direction. Any signs of stronger-than-expected inflation or labor market strength in either country may shift rate expectations and impact the pair’s trajectory. Additionally, developments in the oil market will continue to play a crucial role in influencing the Canadian dollar’s performance.
For now, USD/CAD remains at a critical juncture, with the battle between dollar sentiment and commodity-driven CAD strength keeping volatility in check. A decisive break on either side of 1.4200 could set the stage for the next major move, making the upcoming sessions crucial for traders watching this pair.
