**USD/CAD Continues Bullish Streak: Fourth Consecutive Day of Gains**
*Originally reported by Traders Union News. Article extended and adapted with added information from leading forex sources and market analysis.*
The USD/CAD currency pair has extended its upward momentum into a fourth consecutive day, signaling a sustained bullish trend amid a combination of oil price fluctuations, central bank policy divergence, and macroeconomic uncertainties. This persistent rally reflects the ongoing strength in the U.S. dollar and the relative weakness in the Canadian dollar, especially as Canada’s major export, crude oil, faces renewed pressure in the market.
Below is a detailed breakdown of the factors contributing to the pair’s rise, potential future trajectories, and technical levels that both traders and analysts are closely monitoring.
## Fundamentals Driving USD/CAD Gains
The strengthened performance of USD/CAD over recent days is tied to several macroeconomic and geopolitical factors:
### 1. Divergence Between the Federal Reserve and the Bank of Canada
– **The Federal Reserve’s hawkish stance**: U.S. Federal Reserve officials have signaled that interest rates may remain elevated for longer than anticipated to continue fighting inflation. Most recent Fed minutes indicate that there is still concern about sticky inflation, which reduces the likelihood of rate cuts in the coming months. This provides strong support for the greenback.
– **Bank of Canada’s dovish signals**: In contrast, the Bank of Canada (BoC) is expressing concerns about softer economic growth indicators and slowing inflation, opening the door for rate cuts within 2024. As recently as early June, several analysts forecast a possible 25 basis point rate cut by the BoC as soon as July or September, depending on incoming data trends.
This divergence in central bank policy expectations boosts demand for USD over CAD, as higher U.S. interest rates attract capital inflows.
### 2. Oil Prices and Their Impact on the Canadian Dollar
– **Canada’s high dependency on oil exports**: As a major oil exporter, Canada’s economic performance is closely tied to the health of the global oil market. The Canadian dollar often moves in tandem with oil prices due to this correlation.
– **Recent oil price weakness**: West Texas Intermediate (WTI) crude has seen downward pressure recently amid concerns over global demand, shaky economic performance in China, unexpected inventory builds in the U.S., and rising production from non-OPEC+ sources. As oil prices fall, the CAD tends to weaken accordingly.
### 3. Economic Data Surprises from the U.S.
– **Stronger-than-expected U.S. job data and inflation readings**: In late May and early June 2024, U.S. job numbers came in above consensus, while inflation remained stickier than economists projected. These developments reinforce the Fed’s case for keeping interest rates higher for an extended period.
– **Robust GDP growth readings**: Q1 and preliminary Q2 GDP figures suggest that the U.S. economy continues to expand at a healthy pace, further strengthening the U.S. dollar.
### 4. Risk Sentiment and Global Geopolitical Factors
– **Safe-haven flows into USD**: Persistent uncertainties related to the Middle East, global trade, and slowing European growth are driving investors towards safe-haven assets. The U.S. dollar consistently benefits in times of global risk-off sentiment.
– **China’s economic slowdown**: As China, another major oil consumer, records slower-than-expected industrial output and weaker economic indicators, oil prices decline, which in turn weakens the Canadian dollar.
## Technical Analysis: Bullish Signals Confirm More Upside Potential
Technical analysis supports the fundamental outlook as USD/CAD breaches key resistance levels and forms bullish chart patterns.
– **Trend direction**: The currency is trading in a clear uptrend, with higher highs and higher lows consistently forming on the daily chart.
– **Moving averages**:
– The pair is trading comfortably above its 50-day and
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