USD/CAD continues its upward trend, with focus on US CPI and Bank of Canada policy expectations
2025-09-11 13:58:48
The U.S. PPI fell to 2.6% year-on-year in August, well below the market expectation of 3.3%, and fell 0.1% month-on-month. This data reinforced market expectations that the Federal Reserve will cut interest rates by at least 25 basis points at its September meeting, while the probability of a 50 basis point cut has also increased to 12%.
The US dollar has thus lost some support, and its subsequent trend is highly dependent on the CPI data to be released tonight.
Canada's unemployment rate rose to 7.1% in August, up from 6.9% in the previous month, indicating that the job market is under pressure and economic momentum is weakening under the pressure of US tariffs. This has increased market expectations that the Bank of Canada will resume easing this month, limiting the upside potential of the Canadian dollar.
The USD/CAD pair has closed higher for three consecutive days and is currently trading around 1.3870. Key support is currently at 1.3820, below which the pair could retest 1.3760. Further declines could target 1.3700.
On the upside, initial resistance is 1.3900. If it breaks through this level, it will likely rise to the 1.3950-1.3970 range, with further targets at the 1.4000 psychological level. In terms of technical indicators, the RSI is gradually entering the overbought zone, suggesting that the exchange rate may face some correction pressure in the short term.
Editor's opinion:
The current USD/CAD trend is constrained by the hedging effect of policy expectations between the Federal Reserve and the Bank of Canada. Weak US CPI data could put pressure on the US dollar, potentially pushing it below the 1.3820 support level. Strong data could push the dollar above 1.3900 and test the 1.40 level. Short-term investors should monitor the direction of the CPI breakout after its release.
The US dollar has thus lost some support, and its subsequent trend is highly dependent on the CPI data to be released tonight.
Canada's unemployment rate rose to 7.1% in August, up from 6.9% in the previous month, indicating that the job market is under pressure and economic momentum is weakening under the pressure of US tariffs. This has increased market expectations that the Bank of Canada will resume easing this month, limiting the upside potential of the Canadian dollar.
The USD/CAD pair has closed higher for three consecutive days and is currently trading around 1.3870. Key support is currently at 1.3820, below which the pair could retest 1.3760. Further declines could target 1.3700.
On the upside, initial resistance is 1.3900. If it breaks through this level, it will likely rise to the 1.3950-1.3970 range, with further targets at the 1.4000 psychological level. In terms of technical indicators, the RSI is gradually entering the overbought zone, suggesting that the exchange rate may face some correction pressure in the short term.
Editor's opinion:
The current USD/CAD trend is constrained by the hedging effect of policy expectations between the Federal Reserve and the Bank of Canada. Weak US CPI data could put pressure on the US dollar, potentially pushing it below the 1.3820 support level. Strong data could push the dollar above 1.3900 and test the 1.40 level. Short-term investors should monitor the direction of the CPI breakout after its release.
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