**USD/CAD Outlook: Greenback Stabilizes After Monday’s Dip**
*Adapted and expanded from an article by Kenny Fisher for Forex Crunch, July 22, 2025*
The USD/CAD currency pair showed signs of recovery on Tuesday, rebounding slightly after a notable dip on Monday. This movement in the US dollar comes amid shifting market sentiment and a series of key economic data releases from both the United States and Canada. Traders and analysts are watching closely to determine whether this rebound marks the beginning of a trend reversal or a temporary stabilization.
This article explores the current status of the USD/CAD pair, its recent price movements, contributing economic factors, and key events that may influence its trajectory in the coming weeks.
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## Recent Performance of USD/CAD
The USD/CAD currency pair has had a turbulent start to the week. On Monday, the pair dropped to its lowest level in more than a month, reaching around 1.3540, as the US dollar experienced a broad wave of selling pressure. The Canadian dollar, by contrast, benefitted from stronger commodity prices and investor appetite for risk. However, on Tuesday, the US dollar found some support and the pair climbed back to the 1.3580 level.
### Technical Overview:
– **Support levels**: 1.3540, 1.3500, 1.3450
– **Resistance levels**: 1.3585, 1.3620, 1.3670
The bounce-off from the 1.3540 support level suggests some buying interest may be returning. Still, the near-term technical outlook remains uncertain, especially in light of ongoing macroeconomic developments.
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## Key Drivers Behind USD/CAD Movement
Several major factors have influenced the USD/CAD’s movement this week and will continue to shape the pair’s short-term direction.
### 1. US Dollar Weakness
On Monday, the US dollar fell significantly against most major counterparts. This weakness can be traced to multiple factors:
– **Soft US economic data**: Recent indicators have pointed to a potential cooling of economic momentum. For instance, industrial production rose less than expected in June while housing metrics suggest slowing demand.
– **Fed rate expectations**: Hints of a more dovish Federal Reserve have reduced upward pressure on the dollar. Investors have started to price in fewer rate hikes or even the possibility of rate cuts by early 2026 if inflation remains in check and growth slows.
– **Risk-on sentiment**: Improving equity markets and easing tensions globally have reduced demand for the safe-haven US dollar.
### 2. Strength in Crude Oil Prices
As a major exporter of crude oil, the Canadian dollar often strengthens alongside rising oil prices. West Texas Intermediate (WTI) crude rose to above $82 per barrel, its highest level in nearly three months. This supported the Canadian dollar on Monday and contributed to the USD/CAD pair’s decline.
Key contributors to oil price appreciation:
– **Supply disruptions** in the Middle East and North Africa
– **Strong summer demand** for gasoline and jet fuel in North America and Europe
– **OPEC+ discipline** in maintaining production levels to support prices
### 3. Bank of Canada (BoC) Outlook
Recently, policymakers at the Bank of Canada have struck a relatively balanced tone. While inflation remains close to target, the central bank remains cautious about cutting rates too soon.
Market participants are divided over whether BoC will initiate a rate cut in the final quarter of 2025 or extend its pause into early 2026. Hawkish comments from BoC officials have lent some strength to the Canadian dollar.
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## Upcoming Economic Events to Watch
Several important economic indicators and policy signals over the remainder of July and into early August could significantly influence the USD/CAD pair.
### United States:
– **July 24: PMI Data (Manufacturing and Services)**
Investors will watch for evidence of
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