Title: USD/CAD Forex Signal Analysis – Forecast for September 8, 2025
Original article provided by: DailyForex.com
Author Credit: Adam Lemon
Updated and Expanded by Market Analysis Desk
Overview
The USD/CAD currency pair remains a focal point of interest among forex traders due to its sensitivity to commodity prices, particularly crude oil, and monetary policy decisions made by the U.S. Federal Reserve and the Bank of Canada (BoC). As of September 8, 2025, market attention is centered on continued U.S. economic resilience and oil price fluctuations, which are major drivers of this pair.
This detailed forecast explores the key technical and fundamental indicators affecting USD/CAD, outlines potential trading scenarios, and includes strategic insights for traders managing positions in current market conditions.
Fundamental Analysis
The U.S. dollar has displayed significant strength in recent weeks, supported by sustained inflationary pressures and a hawkish stance by the Federal Reserve. Meanwhile, the Canadian dollar remains closely tethered to crude oil prices and the BoC’s monetary policy trajectory.
Key Fundamentals Driving USD/CAD:
• Federal Reserve Policy Outlook:
Continuing strength in U.S. economic data such as labor market growth and consumer spending has led the market to expect that the Federal Reserve will keep interest rates elevated for a longer period. In the latest meeting, Fed Chair Jerome Powell reiterated the commitment to curbing inflation, citing concerns over persistent underlying price pressures. This outlook has fueled U.S. dollar bullishness across the board.
• Canadian Economic Conditions:
The Canadian economy has shown signs of moderate slowing, with recent GDP prints underperforming expectations. CPI data remains within the BoC’s target range, prompting speculation that Canada might reach the end of its tightening cycle. This divergence in monetary expectations relative to the Federal Reserve continues to weigh on the Canadian dollar.
• Oil Market Volatility:
Crude oil prices have traded between $82 and $90 per barrel in recent weeks due to supply concerns stemming from OPEC production cuts and geopolitical tensions. As Canada is a major oil exporter, higher oil prices typically support the CAD. However, the correlation weakens when monetary policy divergence is in play, as we currently see.
• U.S. Jobs and Inflation Data:
Recent data from the U.S. Department of Labor reported non-farm payrolls exceeding 230,000 jobs in August, beating consensus expectations. Concurrently, U.S. CPI data released at 3.2% YoY has kept inflation concerns elevated, reinforcing tightening expectations and supporting USD momentum.
Technical Analysis
USD/CAD is currently trading in a bullish trend, having broken above crucial resistance levels in the past week. Strong upward price momentum combined with bullish fundamental sentiment suggests continued gains may be in store. However, caution is advised as resistance at psychological and technical levels could cap the rally.
Current Market Price: 1.3720 as of September 8, 2025
Daily Chart Observations:
• Price Movement:
– The pair has formed a sequence of higher highs and higher lows, indicating a strong uptrend.
– USD/CAD pierced the 1.3700 resistance level, previously a psychological and technical barrier.
– 50-day Exponential Moving Average (EMA) stands at 1.3602, supporting a near-term bullish bias.
– 200-day EMA is positioned at 1.3445, well below current market price and rising.
• Momentum Indicators:
– RSI (Relative Strength Index): Currently at 68, slightly below the overbought threshold of 70.
– MACD (Moving Average Convergence Divergence): Remains above the signal line, confirming upward price momentum.
• Price Action Patterns:
– Bullish flag pattern observed between August 23 to September 3 served as a continuation pattern.
– The recent breakout has been accompanied by increasing volume, adding credibility to the
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