**USD/CAD Builds Momentum Amid Bullish Signals – In-Depth Analysis**
*Based on the original analysis published by economies.com on August 18, 2025. This article has been expanded with broader contextual information for traders seeking deeper insights into the USD/CAD pair.*
The USD/CAD currency pair has shown renewed bullish behavior recently, with market indicators suggesting a continuation of upward movement in the near term. The pair’s technical performance provides significant clues about the likely trajectory, especially amid broader macroeconomic factors influencing both the U.S. Dollar and the Canadian Dollar.
This extended analysis aims to provide traders with a comprehensive outlook on the pair, encompassing technical chart patterns, fundamental influences, monetary policy dynamics, and expectations for short- to medium-term price action.
## Current Market Status
As per the original report by economies.com (August 18, 2025), USD/CAD is showing signs of building positive strength. The price has been attempting to rebound candidly after finding support at the 1.3480 level. The pair’s recovery is gradually restoring confidence among bulls, especially after recent sideways movement.
### Key Technical Observations
– The pair is currently trading near 1.3540, supported by a short-term ascending trend line that began forming earlier in August.
– The 50-day Simple Moving Average (SMA) is aligning as dynamic support, intersecting near the price neckline, adding weight to the bullish momentum.
– RSI (Relative Strength Index) is hovering just above the 50 level, moving positively without entering overbought territory, which suggests potential for further gains without imminent exhaustion.
– A sustained breakout above 1.3560 could confirm the continuation of the upward trend, with 1.3630 seen as the next key resistance.
## Upward Prospects: What Could Drive Further Gains?
Several technical and fundamental elements support the bullish case for USD/CAD. These drivers include:
### 1. Technical Momentum
– Recovery from the 1.3480 support indicates a market floor that traders are respecting, forming a base for potential upward swings.
– Positive crossover between short-term and medium-term moving averages might soon occur, reinforcing bullish sentiment.
– Absence of significant overhead resistance until 1.3630 provides room for the pair to advance.
### 2. U.S. Dollar Strength
The U.S. Dollar Index (DXY) has remained robust, supported by monetary policy decisions from the Federal Reserve and healthy macroeconomic data.
– Fed policy: Despite speculation about possible rate cuts in late 2025, inflation in the U.S. remains sticky, and statements made during the Jackson Hole Symposium have signaled the possibility of keeping rates higher for longer.
– GDP Performance: Q2 2025 U.S. GDP grew above expectations at 2.4%, providing strength to the greenback.
– Employment Data: The U.S. labor market remains resilient, with the latest non-farm payrolls (July 2025) showing an addition of 215,000 jobs.
These elements collectively underpin the dollar’s bullish momentum against major currencies like the Canadian Dollar.
### 3. Canadian Dollar Weakness
The Canadian Dollar, often linked closely to oil prices due to Canada’s status as a major crude exporter, has been facing depreciation for various reasons:
– Crude Oil Volatility: Oil prices had been fluctuating between $77 and $83 per barrel during early August 2025. Any softness in prices tempers support for CAD.
– Domestic Economy: Canada’s GDP growth figures for Q2 came in disappointingly at just 1.1%, under expectations.
– Bank of Canada (BoC) Outlook: The central bank has adopted a more dovish tone. Expectations for a rate cut in Q4 2025 have weakened CAD forecasts, leading to further USD/CAD upside.
## Key Levels to Watch
Here are the significant technical levels that traders should monitor:
### Support Levels
– 1.348
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