**USD/CAD Analysis: Positive Momentum Builds Amid Bullish Signals**
*Based on the original article from Economies.com, with additional insights.*
The US dollar against the Canadian dollar (USD/CAD) has shown positive movement, hinting at a resurgence in bullish momentum. Following a series of fluctuating sessions, the currency pair is exhibiting technical behavior that suggests a potential continuation of the upward trend. This analysis will break down the key technical indicators, fundamental drivers, and short-to-medium term expectations for USD/CAD. Insights are drawn from the original August 13, 2025, analysis published on Economies.com, augmented with data and expert opinions from other forex-related sources.
**Technical Analysis Overview**
According to the original analysis by Economies.com, the USD/CAD pair is currently navigating a technical setup that may pave the way for further gains. The pair’s recent movements are developing within a bullish channel, and several technical indicators are pointing toward continued upward momentum.
**Key technical factors:**
– **Short-Term Resistance Zone**: The USD/CAD pair is approaching a critical resistance zone around 1.3515, and a successful breakout above this level could confirm continuation of the bullish trend.
– **Support Holding Firm**: The 50-day Exponential Moving Average (EMA50) is providing solid support, curbing any bearish attempts and reinforcing the scenario of upward movement.
– **MACD Signals**: The Moving Average Convergence Divergence (MACD) indicator is currently producing positive signs, further backing the bullish scenario.
– **Trend Continuation Likely**: Current price action suggests accumulation of buying strength that, if sustained, could push the pair toward the next target at 1.3590, followed by a possible movement toward 1.3675 in the intermediate term.
**Fibonacci and Trend Line Insights:**
– The pair remains above a key ascending trend line and continues to form higher lows on the 4-hour and daily charts.
– Fibonacci retracement levels from the most recent downward swing keep 1.3470 as short-term support, marking the 38.2% retracement level, which often acts as a springboard in trending markets.
**Short-Term Technical Levels**
| Support | Resistance |
|———|————|
| 1.3450 | 1.3515 |
| 1.3400 | 1.3590 |
| 1.3350 | 1.3675 |
If the price remains above 1.3450, the bullish trend is expected to continue. Dropping below this level, however, could weaken the uptrend and open the door to further retracement toward the 1.3370–1.3350 area.
**Fundamental Drivers Affecting USD/CAD**
Beyond the technical setup, several macroeconomic and fundamental factors are contributing to the direction of the USD/CAD currency pair. These include monetary policy, economic data releases, oil prices, and overall market sentiment toward risk assets.
**1. Diverging Monetary Policies**
– **Federal Reserve (USA)**: The U.S. Federal Reserve has retained a hawkish stance into Q3 2025, with inflation still hovering slightly above its 2% target. Market participants await more signals on rate cuts, but the Fed remains cautious following strong labor market data and consumer spending.
– **Bank of Canada (BoC)**: In contrast, the Bank of Canada has adopted a slightly dovish tone. Although core inflation is slowing in Canada, growth has also contracted marginally, sparking speculation that the BoC might lower rates before the Fed. This divergence increases the appeal of the US dollar over the Canadian dollar.
**2. Oil Prices and Their Impact on CAD**
– Crude oil prices play a crucial role in the valuation of the Canadian dollar, due to Canada’s status as a major oil exporter.
– Throughout July and early August 2025, crude
Read more on USD/CAD trading.