Canadian Dollar seems vulnerable near August 7 low amid sliding oil prices, trade tensions
The USD/CAD pair attracts some dip-buyers at the start of a new week, stalling Friday's modest pullback from levels beyond the 1.4000 psychological mark, or the highest since August 7. Moreover, the supportive fundamental backdrop backs the case for an extension of a nearly two-week-old uptrend.
The Canadian Dollar (CAD) appears vulnerable near its August 7 low as oil prices continue to slide and trade tensions escalate between the US and Canada. The US Federal Reserve's recent interest rate hike and the imposition of steep 50% tariffs on Canadian goods, while Canada retaliates with tariffs on US goods, have contributed to the Canadian Dollar's relative underperformance against the US Dollar (USD).
The BoC maintained its key policy interest rate at 2.25%, while the Fed increased rates for the first time in over three years. The USD/CAD pair shows a bullish near-term bias above the 100-day EMA at 1.3924 and the 38.2% Fibonacci retracement at 1.3932, with the next resistance at the 61.8% Fibonacci retracement near 1.4052. However, a deeper break could expose the 23.6% retracement at 1.3858 before the structural floor around 1.3738.
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