Calmer Markets Drag USD/CAD Down – Is the Canadian Dollar Gaining Control?
The U.S. dollar dropped against the Canadian dollar on Tuesday, with the USD/CAD pair falling to around 1.3720. This move came after news of a ceasefire between Israel and Iran, which reduced global tensions. When the world feels calmer, investors often avoid safe-haven currencies like the U.S. dollar, helping the Canadian dollar gain strength.
Adding to the pressure on the U.S. dollar were recent comments from U.S. Federal Reserve officials. One of them suggested that interest rate cuts might happen as early as July. This makes the dollar weaker, as lower interest rates usually reduce its value.
Looking at the technical side, the USD/CAD pair is now trading below a key level – its 100-day moving average. This shows a weak trend. If the pair drops below the support level at 1.3635, it might fall further to 1.3575 or even 1.3540. On the other hand, if the price moves back up, it would need to cross 1.3820 to head higher. After that, it could face more resistance near 1.3862 and 1.3935.
Impact:
USD/CAD might stay weak if peace holds in the Middle East and rate cut talks continue. But strong U.S. data or rising tensions could push it back up.