**USD/CAD Rallies Beyond 100-Hour Moving Average, Hits 1.3910 Amid Sustained US Dollar Strength**
Original Source: FXDailyReport.com
Original Author: Kathy Lewis
Link: [USD/CAD Extends Gains Above 100-Hour MA to Trade at 1.3910](https://fxdailyreport.com/usd-cad-extends-gains-above-100-hour-ma-to-trade-at-1-3910/)
The U.S. dollar continues to show robust performance against its Canadian counterpart, with the USD/CAD pair pushing higher beyond its 100-hour moving average (MA) to trade around 1.3910. This sustained uptrend emerges amid broader strength in the US dollar driven by hawkish Federal Reserve expectations, pressure on oil prices, and geopolitical uncertainties that support demand for safe-haven assets.
This article explores the underlying economic factors, technical indicators, and market sentiment influencing the ongoing USD/CAD trend. Drawing from insights in Kathy Lewis’ FXDailyReport.com article and additional sources, we present a thorough 1000-word analysis of the USD/CAD currency pair’s movement and potential future direction.
## Overview of the USD/CAD Performance
The USD/CAD currency pair has been on an upward trajectory over the past several trading sessions. The most recent price action saw the pair break above the 100-hour moving average, a key short-term technical indicator, which often signifies bullish momentum when surpassed decisively.
– **Current Trade Level:** Approximately 1.3910 (as of the latest session)
– **Key Indicators:** 100-hour moving average breakout, bullish trend confirmation
– **Short-Term Bias:** Bullish
– **Support and Resistance:** Support seen near 1.3850, resistance around 1.3950 and 1.4000
## Key Drivers Behind USD/CAD Movement
Several macroeconomic and technical factors are influencing the current rally in the USD/CAD currency pair:
### 1. Federal Reserve Policy Outlook
– Continued hawkish rhetoric from Federal Reserve officials has supported the US dollar across the board.
– Although inflation in the U.S. has started to show some signs of cooling, Fed policymakers have reiterated the potential for additional rate hikes if inflation does not return to the long-term target of 2%.
– Interest rate differentials between the U.S. and Canada have widened, making the greenback more attractive for investors, which in turn boosts the USD/CAD pair.
– Stronger-than-expected data from the U.S. labor market and consumer spending also suggest that the economy can withstand higher rates for longer.
### 2. Weakness in Oil Prices
– Canada is a major crude oil exporter. The value of the Canadian dollar (also known as the “loonie”) is highly correlated with oil prices.
– Recent weakness in oil markets has put downward pressure on the Canadian dollar.
– West Texas Intermediate (WTI) crude oil fell from recent highs due to concerns about global demand and oversupply.
– The looming economic slowdown in China, one of the world’s largest oil importers, has also contributed to bearish sentiment in the oil market.
### 3. Economic Divergence Between Canada and the U.S.
– Recent data from Canada has presented a mixed picture, with signs of economic slowing emerging.
– The Bank of Canada (BoC) opted to hold its benchmark interest rate steady, citing concerns about the domestic economy’s ability to absorb further tightening.
– Inflation in Canada remains elevated but has shown signs of deceleration, bolstering the BoC’s wait-and-see stance.
– In contrast, the more aggressive tone from the Federal Reserve continues to highlight policy divergence between the two nations.
### 4. Technical Market Positioning
– The breakout above the 100-hour moving average indicates short-term bullish momentum in the USD/CAD pair.
– Traders often view such breakouts as buying opportunities provided the breakout is accompanied by increased volume and
Read more on USD/CAD trading.