USD/CAD rose to a more than one-week high, with Canadian CPI and the Fed minutes becoming key variables.
2026-02-17 12:07:59
During Tuesday's Asian trading session, USD/CAD continued its rebound from the 1.3500 level, rising to a more than one-week high and currently hovering around the mid-1.3600 level.
Despite the price rally, bulls remained cautious ahead of key data releases. Market focus is on the upcoming Canadian January Consumer Price Index (CPI).
Overall CPI is expected to remain at 2.4% year-on-year, still above the Bank of Canada's 2% target. If inflation continues to be resilient, it may reduce the need for a near-term interest rate cut, thereby supporting the Canadian dollar.
Conversely, if the data unexpectedly falls, it will strengthen market bets on easing policies, pushing USD/CAD further upward. Currently, the Bank of Canada maintains a relatively neutral stance, but weaker international oil prices have diminished the attractiveness of the commodity currency, the Canadian dollar.
As a currency highly correlated with commodities, the Canadian dollar tends to fluctuate with oil prices. Recent pressure on crude oil prices has indirectly weighed on the Canadian dollar, providing some support for the USD/CAD exchange rate.
Regarding the US dollar, although it continued the modest gains from the previous trading day, the increase was limited. After last week's weak US consumer inflation data, the market significantly increased its expectations for a rate cut in June, and anticipated at least two 25-basis-point rate cuts in 2026.
Furthermore, discussions surrounding the Federal Reserve's policy independence have also dampened bullish sentiment towards the dollar. Investors are awaiting the release of the FOMC meeting minutes on Wednesday for further confirmation of the Fed's policy path.
The US core PCE price index, released this Friday, will also be a key catalyst, providing new directional guidance for the dollar's trajectory.
Overall, Canadian inflation data and expectations for Federal Reserve policy are the dual driving factors. USD/CAD may maintain a slightly bullish oscillation pattern in the short term before the data is released, but a breakout will still require support from fundamentals.
From the daily chart, USD/CAD formed a temporary support around 1.3500 and then rebounded technically. The short-term moving averages turned upwards, and the price regained the 20-day moving average, suggesting that the bearish momentum is weakening.
If the price breaks through the 1.3650 resistance zone, it is expected to further test the 1.3700 level; conversely, if it is blocked and falls back below 1.3550, it may retest the 1.3500 support.
The 4-hour chart shows a short-term bullish trend. The MACD is above the zero line, and the RSI is close to 60, indicating upward momentum. However, it has not yet entered the overbought zone, suggesting that there is still some room for further upward movement.
However, bulls may remain cautious ahead of the release of major data.
Editor's Note:
The current rise in USD/CAD is more due to the weakness of the Canadian dollar and a technical correction, rather than a broad strengthening of the US dollar. Canadian CPI data will be the core factor determining the short-term direction of the Canadian dollar.
If inflation remains high, the upside for USD/CAD may be limited; however, if data is weak and oil prices are under pressure, the exchange rate may continue its rebound.
With expectations of a continued Fed rate cut persisting, the US dollar is unlikely to establish a strong upward trend. Therefore, the USD/CAD pair is likely to trade with a slightly bullish bias in the short term, but the risk of rapid fluctuations after data releases should be noted.
Despite the price rally, bulls remained cautious ahead of key data releases. Market focus is on the upcoming Canadian January Consumer Price Index (CPI).
Overall CPI is expected to remain at 2.4% year-on-year, still above the Bank of Canada's 2% target. If inflation continues to be resilient, it may reduce the need for a near-term interest rate cut, thereby supporting the Canadian dollar.
Conversely, if the data unexpectedly falls, it will strengthen market bets on easing policies, pushing USD/CAD further upward. Currently, the Bank of Canada maintains a relatively neutral stance, but weaker international oil prices have diminished the attractiveness of the commodity currency, the Canadian dollar.
As a currency highly correlated with commodities, the Canadian dollar tends to fluctuate with oil prices. Recent pressure on crude oil prices has indirectly weighed on the Canadian dollar, providing some support for the USD/CAD exchange rate.
Regarding the US dollar, although it continued the modest gains from the previous trading day, the increase was limited. After last week's weak US consumer inflation data, the market significantly increased its expectations for a rate cut in June, and anticipated at least two 25-basis-point rate cuts in 2026.
Furthermore, discussions surrounding the Federal Reserve's policy independence have also dampened bullish sentiment towards the dollar. Investors are awaiting the release of the FOMC meeting minutes on Wednesday for further confirmation of the Fed's policy path.
The US core PCE price index, released this Friday, will also be a key catalyst, providing new directional guidance for the dollar's trajectory.
Overall, Canadian inflation data and expectations for Federal Reserve policy are the dual driving factors. USD/CAD may maintain a slightly bullish oscillation pattern in the short term before the data is released, but a breakout will still require support from fundamentals.
From the daily chart, USD/CAD formed a temporary support around 1.3500 and then rebounded technically. The short-term moving averages turned upwards, and the price regained the 20-day moving average, suggesting that the bearish momentum is weakening.
If the price breaks through the 1.3650 resistance zone, it is expected to further test the 1.3700 level; conversely, if it is blocked and falls back below 1.3550, it may retest the 1.3500 support.
The 4-hour chart shows a short-term bullish trend. The MACD is above the zero line, and the RSI is close to 60, indicating upward momentum. However, it has not yet entered the overbought zone, suggesting that there is still some room for further upward movement.
However, bulls may remain cautious ahead of the release of major data.
Editor's Note:
The current rise in USD/CAD is more due to the weakness of the Canadian dollar and a technical correction, rather than a broad strengthening of the US dollar. Canadian CPI data will be the core factor determining the short-term direction of the Canadian dollar.
If inflation remains high, the upside for USD/CAD may be limited; however, if data is weak and oil prices are under pressure, the exchange rate may continue its rebound.
With expectations of a continued Fed rate cut persisting, the US dollar is unlikely to establish a strong upward trend. Therefore, the USD/CAD pair is likely to trade with a slightly bullish bias in the short term, but the risk of rapid fluctuations after data releases should be noted.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
