USD/CAD price stabilizes above $1.44 as BoC rate cut pressures Canadian dollar
USD/CAD steadies above 1.4400, targeting 1.4518 amid BoC rate cut
USD/CAD is trading near 1.4410, holding steady above the 1.4400 psychological support, as bullish momentum remains intact. The pair continues to trade within an ascending channel, reinforcing its uptrend, while short-term technical indicators suggest further upside potential.
USD/CAD remains positioned above the nine- and 14-day EMAs, which currently stand at 1.4390 and 1.4384, respectively. The 14-day RSI remains above 50, confirming sustained positive sentiment. If the pair breaks above 1.4518, last seen in March 2020, it could extend gains toward the ascending channel resistance near 1.4870.
On the downside, the immediate support level is at 1.4400, followed by the nine-day EMA at 1.4390. A break below this could push USD/CAD toward 1.4360, which aligns with the lower boundary of the ascending channel.
USD/CAD price analysis (Dec 2024 - Jan 2025) Source: TradingView.
BoC rate cut and U.S. policy divergence pressure CAD
The Canadian dollar has struggled against the US dollar, dipping below 1.44 per USD after the Bank of Canada (BoC) cut its key interest rate by 25 basis points to 3.0%. The BoC also ended its quantitative tightening program, signaling a shift toward a more accommodative policy stance. However, concerns over potential US tariffs have further weighed on the Canadian economy.
BoC Governor Tiff Macklem emphasized that tariff threats from the US remain a risk, potentially leading to further adjustments in monetary policy. Additionally, the widening rate differential between the hawkish US Federal Reserve and the dovish BoC has intensified downward pressure on the Canadian dollar.
Outlook: USD/CAD eyes 1.4518 amid policy divergence
With the Fed maintaining a tight monetary policy stance and the BoC pivoting toward rate cuts, USD/CAD remains positioned for further gains. If the 1.4400 support holds, the pair could retest 1.4518, while a failure to maintain its uptrend may trigger a pullback toward 1.4360.
Previously, we discussed USD/CAD’s strength near 1.4400, highlighting its resilience amid BoC’s rate policy shift and US economic divergence. The latest developments reinforce the bullish bias as market participants assess the impact of monetary policy adjustments and trade risks.
