Title: USD/CAD Pressures Key Resistance as Investors Monitor Fed and Oil Prices
Originally reported by Economies.com on August 1, 2025
Author credit: Economies.com Analysis Team
Extended and supplemented with additional insights and analysis
The USD/CAD currency pair has begun August 2025 on a strong note by testing a current resistance level, igniting interest among traders and market watchers. This move follows the pair’s recent upside attempts and reflects broader developments in U.S. monetary policy expectations, Canadian macroeconomic indicators, and global crude oil dynamics.
In this analysis, we will explore the primary technical and fundamental factors influencing USD/CAD at this time, along with projections for the coming weeks and potential scenarios that could unfold depending on both local and global economic developments.
Overview of Recent Market Trends
As of the latest trading session on August 1, 2025, the USD/CAD pair is pressing against a notable resistance zone near 1.3375, a key psychological and technical threshold. This development comes after several days of consolidation just below this level, as traders awaited guidance from pending U.S. and Canadian economic data.
Key highlights from recent sessions include:
– A firm bounce from the support near 1.3220, signaling underlying bullish momentum.
– Modest gains in the U.S. Dollar Index (DXY), which reflects broader greenback strength.
– Continued volatility in crude oil markets, a central driver of the Canadian dollar due to Canada’s position as a major oil exporter.
– Cautious sentiment ahead of upcoming employment data and central bank commentary.
Technical Analysis of USD/CAD
The USD/CAD chart presents signs of a bullish trend starting to reassert itself, especially with the pair climbing toward its prior highs. Traders are watching the 1.3375 barrier closely, as a confirmed breakout could open the door to further upside movement.
Critical technical indicators include:
– Moving Averages:
– The 50-day simple moving average (SMA) is currently trending upwards and sits just below the current price, offering dynamic support near 1.3275.
– The 200-day SMA remains slightly sideways, but price action above it supports the idea of a forming bullish trend.
– RSI (Relative Strength Index):
– The RSI is trading near 60, suggesting that momentum currently favors bulls but is not yet overbought.
– A break above 70 on the RSI would reinforce buying strength but also caution for a possible pullback.
– MACD (Moving Average Convergence Divergence):
– The MACD histogram remains above zero, and recent crossovers suggest bullish bias.
– The signal line crossover earlier this week supported the current breakout attempt.
Key Resistance and Support Levels:
– Resistance:
– 1.3375: Immediate resistance being tested, coinciding with past swing highs.
– 1.3440: Next target if 1.3375 is decisively broken.
– 1.3520: A more formidable longer-term resistance, aligned with highs from May 2024.
– Support:
– 1.3290: Short-term support, previous breakout level.
– 1.3220: Last week’s swing low and neckline area of an inverted head-and-shoulders pattern.
– 1.3125: Longer-term horizontal support from earlier this year.
Fundamental Factors Shaping the USD/CAD Outlook
1. Federal Reserve Policy Outlook
The main factor strengthening the U.S. dollar across the board is the growing belief that the Federal Reserve may hold interest rates higher for longer. The Fed’s most recent statements suggest limited appetite for rate cuts unless inflation convincingly returns to the 2 percent target. Persistent strength in the labor market and consumer spending are complicating hopes for rate easing.
Supporting dollar strength:
– U.S. GDP grew at an annualized rate of 2.8% in Q2 2025, exceeding forecasts of
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