**USD/CAD Analysis: Bullish Momentum Builds as Technical Levels Hold**
*Adapted and expanded from original analysis by Economies.com (August 18, 2025)*
The USD/CAD currency pair is showing signs of building bullish momentum, with its price action and underlying technical indicators suggesting further potential upside. After recent consolidation, the pair found support at key technical levels and now appears poised for a potential rally in the near term. This article dives deeper into what’s driving the price action, including technical analysis, economic fundamentals, oil price influence, Bank of Canada and Federal Reserve policy divergence, and near-term forecasts for USD/CAD.
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## Current Market Context
As of mid-August 2025, the USD/CAD pair continues to trend upwards, benefiting from both robust US dollar strength and weakened Canadian economic data. Traders have paid close attention to the technical patterns developing over the past few weeks. With recent price bounces near support zones and an ongoing uptrend in sight, analysts are monitoring the pair carefully for a breakout toward higher resistance levels.
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## Key Technical Highlights
Technically, USD/CAD has shown resilience after minor pullbacks and is now regaining strength to challenge critical resistance zones. Here’s a summary of the latest technical developments:
– **Support and Resistance Levels:**
– The pair showed renewed strength after bouncing from the 1.3450 support zone.
– Resistance is situated near 1.3620, a level tested repeatedly in recent sessions.
– A sustained move above 1.3620 may open the door to the next significant resistance near 1.3750.
– **Moving Averages:**
– The 50-day Simple Moving Average (SMA) currently supports the bullish trend, lying comfortably below the current price zone.
– The 200-day SMA below the 50-day SMA provides further confirmation of an upward trend on the medium-term time horizon.
– **Trend Channels and Oscillators:**
– USD/CAD remains within a rising channel, with trendlines providing additional technical guidance.
– The Relative Strength Index (RSI) is currently hovering around 60, suggesting upside momentum but still shy of overbought conditions.
– MACD (Moving Average Convergence Divergence) is positioned above the zero line, reinforcing bullish momentum.
– **Fibonacci Levels:**
– Using the July low to the August high as a base, traders note that the 38.2% Fibonacci retracement level near 1.3485 served as critical support.
– The 50% retracement also aligns near 1.3450, which provides additional confidence for bulls.
Overall, the technical landscape supports the continuation of a bullish trend, with caveats on maintaining upward traction and breaking through nearby resistance barriers.
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## Economic Factors Impacting USD/CAD
The performance of the USD/CAD pair is also heavily influenced by macroeconomic fundamentals. Both the US and Canadian economies are showing divergent trends, providing more tailwinds for USD/CAD bulls.
### United States Economic Landscape
– **Robust Labor Market:**
– The US labor market continues to show resilience, with unemployment holding near historic lows in recent releases.
– Non-farm payrolls for July exceeded expectations, adding over 250,000 jobs, reinforcing market confidence in the US recovery.
– **Inflation and Fed Policy:**
– US CPI for July 2025 climbed by 0.3% month-on-month, maintaining year-on-year levels at 3.2%, slightly above the Federal Reserve’s target.
– Fed Chair Jerome Powell reiterated a cautious but data-dependent approach during Jackson Hole 2025, hinting at the possibility of two rate hikes if inflation remains sticky.
– **GDP Growth:**
– The second-quarter GDP expanded at an annualized rate of 2.7%, exceeding forecasts and underlining enduring US economic momentum.
### Canadian Economic Outlook
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