The rebound in oil prices and the expectation of interest rate cuts put pressure on the US dollar and the Canadian dollar, putting pressure on the US dollar to fall against the Canadian dollar
2025-09-16 11:22:55
A rebound in oil prices boosted the Canadian dollar. As attacks on Russian energy facilities in Ukraine intensified, concerns about supply disruptions drove up international oil prices. As a commodity-linked currency, the Canadian dollar found support, suppressing the USD/CAD pair.
Expectations for the Bank of Canada's policy are drawing attention. The market generally expects the Bank of Canada (BoC) to announce a 25 basis point interest rate cut on Wednesday. Earlier, Canada's August employment data showed an increase of approximately 65,500 unemployed people, pushing the unemployment rate to 7.1%, sparking market concerns about an economic slowdown. Tuesday's CPI data will be a key reference for the central bank's subsequent policy decisions.
The US dollar is under pressure as expectations of a Federal Reserve rate cut grow. With investors widely anticipating a 25 basis point rate cut at the Fed's September meeting, the dollar has weakened against major currencies. The market still sees a small probability of a "big cut" of 50 basis points. Furthermore, the market expects the Fed to maintain its easing cycle until the end of 2025.
Morgan Stanley and Deutsche Bank's latest forecast is that the Federal Reserve will cut interest rates by 25 basis points at each of its three meetings in September, October and December, citing slowing inflationary pressures and rising economic risks.
Key to the Fed's outlook lies in its economic forecasts. Investors will also be watching the Fed's Summary of Economic Projections (SEP) and dot plot for insights into FOMC members' attitudes toward the future path of interest rates.
The daily chart shows that USD/CAD maintains its downward trend and is currently trading around 1.3770. If it falls below the support level of 1.3750, it may fall further to 1.3700, with a deeper target at the 50-day moving average of 1.3665.
On the upside, if the exchange rate returns above 1.3800, it will have a chance to challenge the 1.3850 resistance area. The RSI indicator is currently close to neutral, but weak in the short term, indicating that sellers are still dominant.
Editor's opinion: The trend of USD/CAD is being affected by two factors: on the one hand, the Bank of Canada's easing expectations have weakened the Canadian dollar, but the rebound in oil prices has offset some of the negative effects; on the other hand, the Fed's interest rate cut expectations have depressed the US dollar, making the overall downward pressure on the exchange rate greater.
In the short term, if oil prices continue to remain strong and the Federal Reserve releases dovish signals, USD/CAD may continue to fall.
Expectations for the Bank of Canada's policy are drawing attention. The market generally expects the Bank of Canada (BoC) to announce a 25 basis point interest rate cut on Wednesday. Earlier, Canada's August employment data showed an increase of approximately 65,500 unemployed people, pushing the unemployment rate to 7.1%, sparking market concerns about an economic slowdown. Tuesday's CPI data will be a key reference for the central bank's subsequent policy decisions.
The US dollar is under pressure as expectations of a Federal Reserve rate cut grow. With investors widely anticipating a 25 basis point rate cut at the Fed's September meeting, the dollar has weakened against major currencies. The market still sees a small probability of a "big cut" of 50 basis points. Furthermore, the market expects the Fed to maintain its easing cycle until the end of 2025.
Morgan Stanley and Deutsche Bank's latest forecast is that the Federal Reserve will cut interest rates by 25 basis points at each of its three meetings in September, October and December, citing slowing inflationary pressures and rising economic risks.
Key to the Fed's outlook lies in its economic forecasts. Investors will also be watching the Fed's Summary of Economic Projections (SEP) and dot plot for insights into FOMC members' attitudes toward the future path of interest rates.
The daily chart shows that USD/CAD maintains its downward trend and is currently trading around 1.3770. If it falls below the support level of 1.3750, it may fall further to 1.3700, with a deeper target at the 50-day moving average of 1.3665.
On the upside, if the exchange rate returns above 1.3800, it will have a chance to challenge the 1.3850 resistance area. The RSI indicator is currently close to neutral, but weak in the short term, indicating that sellers are still dominant.
Editor's opinion: The trend of USD/CAD is being affected by two factors: on the one hand, the Bank of Canada's easing expectations have weakened the Canadian dollar, but the rebound in oil prices has offset some of the negative effects; on the other hand, the Fed's interest rate cut expectations have depressed the US dollar, making the overall downward pressure on the exchange rate greater.
In the short term, if oil prices continue to remain strong and the Federal Reserve releases dovish signals, USD/CAD may continue to fall.
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