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22/04/25
40
USD/CAD Faces Downward Pressure Amid US Dollar Weakness and Political Uncertainty
The USD/CAD currency pair is facing renewed selling pressure as the US dollar weakens, leading to a downturn in foreign exchange markets. Following a modest recovery from a recent six-month low around 1.3780, selling resumed during the Asian trading session, pushing spot prices down to the 1.3800 level. Current trends indicate that the pair could face continued downward movement, influenced by a persistent bearish sentiment toward the US dollar.
Political uncertainties surrounding the US have contributed to a decline in investor confidence. Recent tariff policy changes from President Trump have raised concerns about potential impacts on economic growth, undermining the dollar’s status as a safe-haven asset. Additionally, Trump’s remarks criticizing the Federal Reserve Chair have intensified fears regarding the central bank’s independence, further dampening the dollar, which recently hit its lowest point since April 2022.
Compounding matters, crude oil prices remain subdued as worries about a potential trade war threaten global economic stability. This strife is likely to affect fuel demand negatively, which in turn could weigh on the Canadian dollar. Ahead of the looming Canadian snap election on April 28, domestic political unease may further diminish support for the loonie, complicating its ability to rebound against the US dollar.
From a technical analysis perspective, the recent breach of the 200-day Simple Moving Average indicates a shift towards a bearish market sentiment. Oscillators reflect sustained negative momentum, suggesting that downward pressure is likely to continue. While a short-covering rally could potentially help prices reclaim the 1.3900 level, significant resistance is expected near the psychological level of 1.4000.
Conversely, if the USD/CAD pair dips below Monday’s low of 1.3780, it could trigger a more pronounced decline, potentially reaching the 1.3750-1.3745 support area and, if further weakness persists, descending towards the 1.3700 level and subsequent support levels in the mid-1.3600s.
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