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23.12.202414:53 Forex Analysis & Reviews: USD/CAD: Analysis and Forecast

Relevancia 05:00 UTC--5

Exchange Rates 23.12.2024 analysis

Today, the USD/CAD pair is regaining some positive momentum, halting its corrective decline from the highest level reached last Thursday, which also marked levels last seen in March 2020. The pair is supported by a combination of factors.

The US dollar, amid the Federal Reserve's hawkish shift signaling a slower pace of rate cuts in 2025, is recovering positive momentum following Friday's pullback from a two-year high.

Exchange Rates 23.12.2024 analysis

The outlook remains favorable for higher US Treasury yields, which is a key factor providing a tailwind for the dollar. On the other side of the pair, the Canadian dollar continues to weaken due to the dovish stance of the Bank of Canada and domestic political developments.

The Canadian central bank has forecast slower growth rates for the final quarter of the current year, adding that the potential for new tariffs on Canadian exports to the US has made economic prospects more uncertain. Additionally, a Friday report from Statistics Canada revealed that retail sales in October were slightly below forecasts and remained flat in November.

Today, traders seeking opportunities in the USD/CAD pair may focus on the US consumer confidence index, which, along with US bond yields, could influence the dollar. Furthermore, oil price movements could also create short-term trading opportunities in the USD/CAD pair.

The fundamental backdrop favors US dollar bulls, supporting the prospect of extending the established uptrend observed over the past two months. However, from a technical perspective, it is worth noting that daily chart oscillators are in overbought territory. Therefore, traders bullish on the pair should exercise caution, as the pair may consolidate before resuming its upward movement.

*El análisis de mercado publicado aquí tiene la finalidad de incrementar su conocimiento, más no darle instrucciones para realizar una operación.

Irina Yanina,
Analytical expert of InstaSpot
© 2007-2024
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