USD bullishly gains against the Canadian Dollar

Forex traders watch to see if prices rise to 1.4000 or drop to 1.3650

By Raed Alkhedr | @raedalkhedr | 17 March 2023

US dollar against the Canadian dollar
US dollar against the Canadian dollar
  • USD/CAD maintaining medium-term bullish trend and trading around 1.3750.

  • Pair stable above 1.3650, surpassing will extend the rise

  • If pair retreats, it may break previous levels and drop to 1.3470

Bank of Canada holds Interest Rates, puts pressure on CAD

The Canadian dollar was under pressure after the Bank of Canada kept interest rates unchanged at its March meeting, marking the first time in nine meetings.

The Bank kept rates at 4.50% and indicated that the Canadian economy was facing multiple pressures. Following the decision, there were expectations that the Bank of Canada would keep rates unchanged at the next meeting, and may even cut rates again if necessary. This came as the US Federal Reserve continued to tighten monetary policy and raise rates.

Earlier, there were expectations of a half-point rate hike by the Fed, but concerns of a new global financial crisis have led to speculation that the Fed may hold rates at the next meeting, though the likelihood of this remains low. Most expectations now support a 25 basis points rate hike by the Fed, further increasing pressure on the Canadian dollar against the US dollar due to the diverging monetary policies of the two countries.

How USD/CAD is moving?

The US Dollar is experiencing a good rebound against the Canadian Dollar. The price of the pair rose to 1.3650, served as a strong support level for the pair and is now trading around 1.3750. The pair faces the resistance at 1.3860, surpassing this level will contribute to extending the rise and reaching 1.4000 and then 1.4150.

However, if the pair retreats from the current levels, it may face the support of 1.3650. By breaking this previous level, the price may continue to fall to 1.3540-1.3470. Therefore, the pair should remain above 1.3650 to extend the upward trend.