Title: USD/CAD Shows Mixed Momentum Amid Fluctuating Trading Patterns and Economic Influences
Source credit: Adapted and expanded from an article originally published on Economies.com titled “The USD/CAD Price Is Witnessing Fluctuated Trading – Analysis – 28-10-2025”
The USD/CAD currency pair has been experiencing a period of intensified fluctuation, reflective of the broader uncertainty in the global forex markets. As of October 28, 2025, the pair continues to hover in a tight range with no definitive breakout in either upward or downward direction. Recent trading activity in this major forex pair highlights a combination of technical indecisiveness and fundamental influences from both the U.S. and Canadian economies.
This article provides an in-depth analysis of the USD/CAD pair, focusing on both short-term and long-term outlooks. It also evaluates contributing macroeconomic and geopolitical factors currently shaping trader sentiment and price action. Detailed insights will help traders navigate the pair’s price behavior, technical setups, and fundamental risk landscape.
Technical Analysis Summary
Recent price patterns suggest that USD/CAD is currently oscillating within a recognizable horizontal channel, exhibiting signs of indecision in market direction.
Key technical findings include:
– The price remains trapped within a support and resistance zone, indicating a sideways trading pattern.
– Immediate support is identified near the 1.3600 level, with crucial resistance observed around the 1.3740 level.
– The moving averages (50-day and 200-day EMAs) have flattened out, signifying a lack of strong momentum on either side.
– Momentum oscillators like the RSI (Relative Strength Index) fell to mid-50s range, pointing to neutral momentum.
– MACD indicators are also showing minimal divergence, underscoring the market’s current consolidation phase.
The failure of the Bears or Bulls to take control illustrates the market’s wait-and-see approach, likely rooted in evolving economic narratives from the U.S. Federal Reserve and the Bank of Canada.
Fundamental Drivers Influencing USD/CAD
The USD/CAD exchange rate is inherently sensitive to interest rate differentials, commodity prices (especially oil due to Canada’s reliance on energy exports), and broader economic data.
Here are the key macroeconomic and geopolitical factors currently affecting USD/CAD performance:
1. U.S. Federal Reserve Monetary Policy
– The Federal Reserve’s policy rate remains at a restrictive level above 5%, with policymakers hinting at a potential end to rate hikes due to slowing inflation numbers.
– Softening U.S. CPI data from September and October 2025 suggest inflation might be sustainably heading back toward the Fed’s 2% target.
– The possibility of rate cuts in early to mid-2026 is building, applying mild downward pressure on the U.S. dollar.
2. Bank of Canada (BoC) Rate Policy and Canadian Outlook
– The Bank of Canada recently left interest rates unchanged at 5%, signaling a cautious stance on inflation, which remains sticky in parts of the services sector.
– The BoC has shifted slightly dovish by projecting slower GDP growth for Q4 2025 and 2026, which tempers demand for the Canadian dollar.
– Any divergence between Fed and BoC policy is likely to weigh on the exchange rate volatility.
3. Crude Oil Prices
– As Canada is a leading exporter of crude oil, the Canadian dollar tends to be heavily influenced by oil price movements.
– WTI Crude has slipped from recent highs of $93 per barrel in September to current levels near $86, driven by rising global inventories and slowing demand in China.
– A weaker oil market undermines CAD strength as Canadian export revenues and trade balances decline.
4. U.S. GDP and Employment Data
– The U.S. continues to post resilient GDP growth, although at a slowing pace.
– Recent job market data show some cooling, but unemployment remains below 4%, supporting demand for the U.S. dollar in risk-off conditions
Read more on USD/CAD trading.