**USD/CAD Price Forecast: Outlook for August 18, 2025**
*Original analysis by: DailyForex.com*
The USD/CAD currency pair has been showing signs of strong momentum in recent sessions, indicating an important juncture for both technical and fundamental traders. With a shifting landscape in oil prices, diverging monetary policies between the U.S. Federal Reserve and the Bank of Canada (BoC), along with broader macroeconomic data releases, this pair remains a critical focus for forex market participants.
This article delves deeply into the latest developments for the USD/CAD pair, guided by technical indicators, central bank signals, economic statistics, and broader sentiment. The goal is to provide a 360-degree view into potential movements ahead in the short to medium term.
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**Highlights of USD/CAD Movement:**
– Recent sessions have seen the pair advancing beyond key resistance levels.
– US Dollar strength is being driven by robust economic data and hawkish Fed sentiment.
– Canadian Dollar remains pressured due to fluctuating commodities and dovish BoC commentary.
– Technical patterns suggest further upside in the short term, but potential retracements should not be ruled out.
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**Fundamental Overview**
1. **U.S. Dollar Strength and Inflation Control:**
– The U.S. Federal Reserve has remained committed to keeping interest rates at elevated levels to combat inflation.
– Recent U.S. economic data continue to outperform forecasts, particularly in job creation and consumer spending.
– The Core PCE Price Index, a favorite inflation gauge for the Fed, remains above its target, keeping rate hike bets on the table.
– Market sentiment suggests that the Fed may not pivot to rate cuts until Q4 2025 or early 2026, lending continued strength to the U.S. Dollar.
2. **Weaker Canadian Economic Outlook:**
– The Canadian economy has begun to show signs of slowing due to high household debt levels and tepid business investments.
– Weaker-than-expected retail sales and soft manufacturing performance have placed downward pressure on the CAD.
– Inflation trends in Canada are beginning to soften, prompting dovish commentary from the Bank of Canada.
– BoC Governor Tiff Macklem recently hinted that the central bank may consider a possible rate cut in Q4 2025 if disinflation continues.
3. **Oil Price Volatility:**
– Canada, a major oil exporter, sees its currency closely tied to energy price fluctuations.
– Brent Crude and WTI Crude have recently faced downward pressure as rising global supply meets tepid demand forecasts.
– The weakening of oil prices takes a toll on the CAD’s strength, contributing to the ongoing USD/CAD uptick.
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**Technical Analysis**
1. **Current Price Trend:**
– As of August 18, 2025, USD/CAD is trading above 1.3600, having broken above the 1.3575 resistance zone.
– This movement confirms bullish momentum, underpinned by consistent higher highs and higher lows on the 4-hour chart.
– The pair has tested the psychological 1.3650 level, which now acts as a pivot point for future moves.
2. **Key Support and Resistance Levels:**
| Level Type | Price |
|————|——–|
| Immediate Support | 1.3575 |
| Strong Support | 1.3500 |
| Minor Resistance | 1.3650 |
| Significant Resistance | 1.3750 |
3. **Technical Indicators:**
– **Moving Averages:**
– The 20-EMA and 50-EMA on the 4H and daily charts are sloping upward, supporting a continuation of the bullish trend.
– Prices remain well above the 200-Day EMA, reinforcing a long-term upward bias.
– **Relative Strength Index (RSI):**
– Currently positioned around
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