The five-day winning streak of USD/CAD came to an abrupt end, with the market now betting again on the Bank of Canada's policy path.
2025-11-06 15:42:49
During Thursday's European session, USD/CAD fell back from recent highs to below 1.4100, ending a five-day winning streak.
The slight intraday rebound in crude oil prices is currently the core driver of the Canadian dollar's strength. Canada is the largest exporter of crude oil to the United States, so changes in oil prices often directly affect the Canadian dollar and have a converse effect on the USD/CAD exchange rate.
From a fundamental perspective, the Bank of Canada announced its second consecutive interest rate cut last week, by 25 basis points to 2.25%, the lowest level since 2022. Governor Tiff Macklem stated that the central bank remains prepared to take further measures if the economic outlook deteriorates, implying that policy remains accommodative.
In the US, the latest employment data provided support for the dollar. The ADP report showed that private sector employment in the US increased by 42,000 in October, not only exceeding market expectations of 25,000 but also significantly reversing the previous decline.
Despite positive jobs data, Federal Reserve Chairman Jerome Powell emphasized that a December rate cut remains uncertain. CME FedWatch data shows that market bets on a December rate cut have fallen from 93% to approximately 70%.
The rebound in oil prices, coupled with a cooling of expectations for a Federal Reserve rate cut, caused the US dollar to lose some momentum, providing room for the Canadian dollar to rebound.
From the daily chart, USD/CAD has formed a double resistance zone in the 1.4160–1.4200 area. This area corresponds to the upper Bollinger Band and the previous high. After five consecutive days of gains, the price showed obvious signs of momentum exhaustion, and the RSI indicator fell back from the overbought zone.
Short-term support lies in the 1.4040–1.4000 range. A break below this level would open up further downside potential to 1.3920 (near the 20-day moving average). The overall trend remains intact, maintaining an upward structure, but we are currently in a technical correction phase following the recent rise.
Editor's Note:
At this stage, the USD/CAD movement appears to be a short-term pullback after profit-taking by long positions, rather than a trend reversal. The key variables influencing the direction remain the difference between oil prices and policy expectations; we await the end of this adjustment.
The slight intraday rebound in crude oil prices is currently the core driver of the Canadian dollar's strength. Canada is the largest exporter of crude oil to the United States, so changes in oil prices often directly affect the Canadian dollar and have a converse effect on the USD/CAD exchange rate.
From a fundamental perspective, the Bank of Canada announced its second consecutive interest rate cut last week, by 25 basis points to 2.25%, the lowest level since 2022. Governor Tiff Macklem stated that the central bank remains prepared to take further measures if the economic outlook deteriorates, implying that policy remains accommodative.In the US, the latest employment data provided support for the dollar. The ADP report showed that private sector employment in the US increased by 42,000 in October, not only exceeding market expectations of 25,000 but also significantly reversing the previous decline.
Despite positive jobs data, Federal Reserve Chairman Jerome Powell emphasized that a December rate cut remains uncertain. CME FedWatch data shows that market bets on a December rate cut have fallen from 93% to approximately 70%.
The rebound in oil prices, coupled with a cooling of expectations for a Federal Reserve rate cut, caused the US dollar to lose some momentum, providing room for the Canadian dollar to rebound.
From the daily chart, USD/CAD has formed a double resistance zone in the 1.4160–1.4200 area. This area corresponds to the upper Bollinger Band and the previous high. After five consecutive days of gains, the price showed obvious signs of momentum exhaustion, and the RSI indicator fell back from the overbought zone.
Short-term support lies in the 1.4040–1.4000 range. A break below this level would open up further downside potential to 1.3920 (near the 20-day moving average). The overall trend remains intact, maintaining an upward structure, but we are currently in a technical correction phase following the recent rise.
Editor's Note:
At this stage, the USD/CAD movement appears to be a short-term pullback after profit-taking by long positions, rather than a trend reversal. The key variables influencing the direction remain the difference between oil prices and policy expectations; we await the end of this adjustment.
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