Title: USD/CAD Technical Forecast: Dollar Rallies Strongly Amid Hawkish Trends – Analysis as of August 22, 2025
Original Source: Economies.com – “The USD/CAD Soars High” by Economies.com Team
The US dollar showed remarkable strength against the Canadian dollar in recent trading sessions, marking a notable upward surge fueled by a combination of technical breakout signals and macroeconomic fundamentals favoring the greenback. On August 22, 2025, USD/CAD broke key resistance levels, confirming continued bullish sentiment in the pair. This technical analysis provides an in-depth look at the market structure, recent performance, and probable scenarios for the currency pair in the near and medium terms.
Below is a consolidated and expanded breakdown based on the original article published on Economies.com, supplemented with recent market data and insights from global forex sources such as ForexLive, FXStreet, and Investing.com.
Overview of USD/CAD Movement
– The USD/CAD currency pair has seen vigorous momentum on the bullish side, registering gains that suggest buyers are now in dominant control of this forex asset.
– The significant upward push was confirmed once the currency pair closed solidly above the resistance level at 1.3550.
– This move signals stronger sentiment for the US dollar, aligning with market expectations around potential interest rate stances by the Federal Reserve versus the Bank of Canada.
– This upside trend indicates a resumption of the broader bullish wave that had briefly retraced earlier in the quarter.
Factors Driving the USD/CAD Rally
Several fundamental and technical factors are providing strong support to the USD’s performance against its Canadian counterpart:
1. Hawkish Federal Reserve Policy Expectations
– Recent Federal Reserve meeting notes have emphasized the potential for prolonged higher interest rates, as inflation remains stubbornly above target.
– While U.S. CPI data has been mixed, the Federal Reserve has signaled that the possibility of further rate hikes is not off the table.
– According to CME’s FedWatch Tool, market odds for another rate hike by year-end have risen to 35% as of mid-August 2025.
2. Weakness in Crude Oil Prices
– The Canadian dollar is closely tied to oil prices due to Canada’s status as a major net oil exporter.
– WTI crude prices dipped below $78 per barrel recently, weakening the loonie and helping push USD/CAD higher.
– Concerns about softer global demand, particularly from China, along with inventory builds in the U.S., have capped upside potential for oil.
3. Risk-Off Sentiment in Global Markets
– The global economy faces rising concerns about stagflation and sluggish growth, causing investors to seek safety in the US dollar.
– Investors are also wary of geopolitical tensions in Eastern Europe and Asia-Pacific, further fueling safe-haven demand.
– The USD, being the world’s reserve currency, naturally benefits during such uncertain macroeconomic conditions.
4. Canadian Economic Indicators Under Pressure
– Canadian GDP growth for Q2 2025 came in at an annualized rate of just 0.9%, below both the prior quarter’s result and analyst expectations.
– The Bank of Canada is under pressure to keep monetary policy relatively loose to stimulate growth, weakening the Canadian dollar further.
– Softening housing market data and lower jobs creation figures have further dampened confidence in CAD.
Technical Analysis: Key Levels and Patterns
From a technical standpoint, the USD/CAD pair exhibits a promising bullish structure. By surpassing earlier consolidation levels, the pair has entered a new leg of the upward trend, suggesting possible continuations.
Support and Resistance Levels:
– Resistance now lies at:
– 1.3625 — minor resistance from June’s peak
– 1.3700 — psychological level and June 2024 highs
– 1.3775 — key technical barrier from 2023
– Support levels to watch:
Read more on USD/CAD trading.