**Canadian Dollar Edges Higher Against the US Dollar: Market Analysis and Outlook**
*By Eren Sengezer, FXStreet (Original article)*
*Expanded with additional data and commentary*
The Canadian dollar (CAD) made incremental gains against the US dollar (USD) in Thursday’s trading session, reflecting a modest strengthening trend amid broader market dynamics. Seen largely as a commodity-linked currency, the CAD continues to be influenced by shifting oil prices, U.S. dollar movements, and expectations surrounding monetary policies on both sides of the border.
While the Canadian dollar gained slightly, broader risk appetite and global macroeconomic conditions still pose challenges to sustained CAD strength. This article breaks down key factors influencing the CAD-USD forecast, including recent price action, technical analysis, economic data releases, and central bank positioning.
## Key Highlights
– The CAD showed marginal gains against the USD on Thursday, but broader sentiment remains neutral.
– USD/CAD pair faced resistance near the 1.3550 mark before settling slightly lower.
– A decline in U.S. Treasury yields and dovish commentary from the Federal Reserve put pressure on the US dollar.
– Crude oil prices, a crucial driver for the Canadian economy, saw mild strength which lent support to the loonie.
– Future trajectory of USD/CAD remains dependent on incoming economic data, central bank commentary, and geopolitical developments.
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## USD/CAD Recent Price Action
The USD/CAD currency pair maintained a relatively stable trading range during Thursday’s session. It saw a minor drop in value due to weaker U.S. economic data and slightly firmer crude oil prices, pushing the Canadian dollar upwards.
– USD/CAD traded in a tight 1.3520–1.3550 range during the late session.
– Spot price closed just below 1.3530, representing a marginal strengthening for the CAD.
– The loonie’s movement, however, was limited compared to volatility in other currency pairs, indicating market indecision.
Scotiabank analysts note that the loonie has not been able to establish a firm directional trend, stuck between 1.34 and 1.37 for much of the past month.
## Technical Analysis: Range-Bound With Upward Risk
Looking at the chart patterns and technical indicators for the USD/CAD pair, traders see strong short-term resistance around 1.3550.
– **Support levels:**
– 1.3500: Psychological support and minor technical line.
– 1.3450: Previously tested lows.
– **Resistance levels:**
– 1.3550–1.3560: Short-term resistance based on recent peaks.
– 1.3600+: Key medium-term resistance if bullish momentum resumes.
Momentum indicators such as the Relative Strength Index (RSI) on the 4-hour and daily charts are near neutral, not signaling overbought or oversold conditions. Furthermore, moving averages, particularly the 20 and 50-day SMAs, remain tightly converged, underscoring the sideways movement.
Scotiabank commented that the broader outlook remains neutral, with limited directionality unless the USD/CAD pair breaks through the upper or lower bounds of its current range.
## Macro Drivers Supporting the CAD
While the Canadian dollar’s appreciation was limited, several macroeconomic factors lent underlying support:
### 1. Oil Prices
As Canada is one of the world’s largest energy exporters, its currency maintains a close, often positive correlation with crude oil prices. On Thursday, West Texas Intermediate (WTI) crude futures rose modestly to trade near $89.50 per barrel, offering a tailwind for the CAD.
– Crude volatility was largely driven by supply concerns in the Middle East and hurricane risks in the U.S. Gulf Coast.
– Higher energy prices typically bolster Canada’s trade balance and, by extension, its currency.
### 2. U.S. Economic Data
U.S. economic indicators played a significant
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