The Canadian dollar has dropped to 1.39 against the U.S. dollar, nearing the two-year low of 1.4 reached on November 1. This decline is mainly due to the strengthening of the U.S. dollar.
Markets are reacting to President-elect Trump’s promises of higher tariffs and increased government spending. As a result, many expect the Federal Reserve to raise interest rates more aggressively.
How U.S. Tariffs Threaten Canadian Exports and Oil Sales
In North America, the idea of higher U.S. tariffs has caused concerns. People worry there might be less demand for Canadian exports, intensified by lower oil prices. Oil is Canada’s main export.
Despite these issues, Canada’s job market remains strong. In October, the unemployment rate stayed at 6.5%, even though experts predicted it would rise to 6.6%.
Additionally, strong numbers from the Purchasing Managers’ Index (PMI) have helped ease the downward pressure on the Canadian dollar, often called the “loonie.” Therefore, investors are closely watching to see what the Bank of Canada will decide next regarding interest rates.
USDCAD Technical Analysis – 13-November-2024
On November 7, the USD/CAD price dipped and tested the bullish fair value gap at 1.385. Consequently, the uptrend resumed, and the bulls stabilized the price above the 100-period simple moving average again.
As for the technical indicators, the Awesome Oscillator shows weak bearish signs that could be ignored. Furthermore, the RSI and Stochastic are not overbought, depicting 59 and 75 in the description. This development in the momentum indicators suggests that the bullish trend should resume.
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Keep Watch as USDCAD Advances Toward 1.50
As of this writing, the USD/CAD currency pair trades at approximately 1.395, exceeding the August 5 high. From a technical standpoint, the outlook of the USD/CAD trend remains bullish as long as the price is above the 1.383 mark (November 5 Low).
The next bullish target in this scenario could be the 1.50 physiological level. Please note that the bullish market should be invalidated if USD/CAD dips below the 1.375 support.
- Support: 1.385 / 1.382 / 1.375
- Resistance: 1.395 / 1.40 / 1.50
J.J Edwards is a finance expert with 15+ years in forex, hedge funds, trading systems, and market analysis.
