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USD/CAD stalls as traders await FOMC Minutes
The Canadian dollar got a lift after Trump paused 50% tariffs on Canada for three days, while CME FedWatch still shows about a 68% chance of a year-end rate hike.
USD/CAD is holding around the 1.3880 area after stalling its recovery from the lowest level since June 3, as investors look ahead to the FOMC Minutes for clues on the Federal Reserve’s next steps, according to FXStreet.
FXStreet reports that the Canadian dollar received a modest boost after US President Donald Trump announced a three day pause on 50% tariffs against Canada following talks with Canadian Prime Minister Mark Carney. The pair also faced pressure as crude oil climbed to a nearly three week high amid the US Iran standoff over the Strait of Hormuz, supporting the oil linked Loonie, while some US dollar selling added downward force to USD/CAD.
FXStreet notes that last week’s US data pointed to cooling inflation and slowing consumer spending, leading traders to scale back expectations for an immediate rate hike, which is capping the dollar’s recovery from a two month low. At the same time, rising energy prices raise inflation risks that could keep the Fed stance more hawkish, supporting elevated US bond yields and limiting USD losses.
On levels to watch, FXStreet says USD/CAD is holding above the 200 day simple moving average near 1.3848, with a break below exposing support around 1.3820 to 1.3815. Upside resistance is seen near 1.3910, with further gains potentially aimed at the 1.4000 psychological mark, as FOMC Minutes remain a key catalyst.
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