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18/03/25
33
USD/CAD: Cautious Upward Movement Ahead of Key Economic Reports
The USD/CAD currency pair is currently seeing a modest upward trend, hovering around the 1.4300 level. Despite recent gains, the potential for significant movement appears limited, particularly in anticipation of the upcoming Canadian Consumer Price Index (CPI) report. The current market dynamics suggest a careful approach for bullish traders.
After experiencing a two-day downturn, the USD/CAD pair has rebounded slightly during the Asian session, recovering from a one-week low of approximately 1.4275 reached the previous day. While there is some momentum for the pair to surpass the 1.4300 psychological level, external factors may temper the upward trajectory.
The US Dollar has begun to recover from its recent lows, which represent the weakest levels since October 2024. This recovery is partly driven by repositioning ahead of crucial central bank meetings scheduled for this week. However, a substantial rise in the USD remains uncertain due to expectations that the Federal Reserve will implement multiple rate cuts over the coming months.
In addition, rising crude oil prices, which recently hit a two-week high, are supporting the Canadian Dollar. The potential for increased tensions in the Middle East poses risks to oil supply, contributing to the upward movement in oil prices. Coupled with positive developments from recent US-Canada trade discussions, these factors are likely to bolster the commodity-linked Loonie and may hinder further advances for the USD/CAD pair.
Traders are advised to exercise caution and may prefer to wait for the outcomes of the anticipated Federal Open Market Committee (FOMC) meeting. On Tuesday, attention will also be on the release of new Canadian CPI data, as this, alongside secondary US economic metrics, could influence the direction of the USD/CAD pair in the near term.
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