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USD/CAD Price Forecast: Anticipating Fed’s Policy Shift at 1.3595
Arslan Butt•Wednesday, March 27, 2024•2 min read
The USD/CAD pair is experiencing a downtrend, currently navigating around the 1.3590 mark, influenced by several pivotal economic factors and monetary policy anticipations in both the US and Canada. The decrease in US Treasury yields has notably pressured the US Dollar, further fueled by market speculations that the Federal Reserve may initiate a policy easing cycle as early as June.
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Such anticipations of policy shifts are dampening the USD’s performance against its Canadian counterpart.
- Federal Reserve’s Easing Anticipation: Expectations of the Federal Reserve starting an easing cycle in June exert downward pressure on the USD, impacting the USD/CAD exchange rate.
- Bank of Canada’s Rate Cut Considerations: The BoC’s discussions on potential rate cuts in 2024 introduce bearish sentiment for the CAD, influencing the pair’s dynamics.
- Impact of Crude Oil Prices on CAD: Recent fluctuations in crude oil prices, a critical Canadian export, pressurize the CAD and affect the USD/CAD pair, limiting its losses amid declining oil prices.
Despite the Bank of Canada’s hints at possible rate cuts in 2024, which usually would support the CAD, the broader anticipation of a dovish pivot by the Federal Reserve overshadows these local economic indicators.
This scenario, coupled with the direct influence of declining crude oil prices on Canada’s economy, sketches a complex picture for the USD/CAD pair moving forward.
As traders and investors align their strategies with these evolving economic narratives, the USD/CAD price forecast remains closely tied to Federal Reserve policies, BoC’s monetary stance, and the ever-volatile crude oil market.
USD/CAD Price Forecast
The USD/CAD pair currently trades at 1.3595, showing potential for an uptrend as it hovers above the pivotal 1.3574 mark.
This positioning suggests a bullish outlook if it maintains above this level, with immediate resistance observed at 1.3615, and further barriers at 1.3661 and 1.3711 indicating upcoming challenges for the pair. Support levels are identified at 1.3540, 1.3506, and 1.3459, providing potential rebound points in case of a downturn.
The Relative Strength Index (RSI) at 59 coupled with the 50-day EMA at 1.3565 supports a bullish sentiment, suggesting strength in the current trend. A break below the pivot point, however, could signal a shift towards a selling trend, necessitating close market monitoring for USD/CAD traders.
- A bullish trend was confirmed above the pivot point of 1.3574.
- Resistance levels at 1.3615, 1.3661, and 1.3711 mark potential hurdles.
- Support levels at 1.3540, 1.3506, and 1.3459 offer safety nets for pullbacks.
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ABOUT THE AUTHOR
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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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