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USD/CAD holds above 1.4050 as Fed hawkish signals lift the dollar
The pair is buoyed by hawkish Fed messaging after the Fed held rates at 3.50% to 3.75% in July, while oil-linked CAD support faces trade-tension risks.
USD/CAD is trading in positive territory near 1.4050 in early European trade, supported by a firmer US Dollar versus the Canadian Dollar, according to FXStreet. The move is tied to hawkish signals from the US Federal Reserve, after the central bank left the federal funds rate unchanged in its July meeting at 3.50% to 3.75%.
FXStreet notes that several Fed officials dissented in favor of a 25 bps rate increase, and Fed Chairman Kevin Warsh said the committee will act quickly if inflation pressures accelerate. Traders are also looking ahead to a preliminary reading of US GDP for Q2 later in the day.
On the CAD side, the article points to renewed military escalation in the Middle East as a potential boost for crude oil prices, which can support the Canadian Dollar because Canada is a major oil exporter. At the same time, strategists at Scotiabank caution that the loonie may still struggle amid lingering trade tensions, with Canada weighing possible retaliation if there is no agreement to avoid 50% tariffs next month.
Technically, FXStreet says USD/CAD remains above the 100-day simple moving average and near the Bollinger middle band, keeping a constructive bullish bias as the market consolidates after a recent advance. The article highlights resistance around 1.4110 and 1.4225, while support is seen near 1.4000 to 1.3995, then lower at the 100-day SMA around 1.3900.
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