The US dollar index consolidated near resistance levels, while the USD/CAD pair remained range-bound.
2026-02-25 09:55:54
During Wednesday's Asian trading session, USD/CAD saw a slight pullback, but the overall decline was limited, with the price remaining close to the previous monthly high, indicating that while the market has a willingness to adjust, it lacks sustained selling momentum.
The market is currently adopting a wait-and-see approach, primarily due to President Trump's upcoming State of the Union address, his first in his second term. The market is focused on his statements regarding the economic outlook, fiscal direction, and geopolitical issues.
If the speech reinforces economic resilience or emphasizes a tightening policy stance, the dollar may find support; conversely, a risk-warning tone could suppress its short-term performance. Meanwhile, the US-Iran nuclear negotiations have entered a crucial phase.
The market remains highly sensitive to the situation in the Middle East, and any signs of escalating tensions could push up crude oil prices. As Canada is a major energy exporter, stronger oil prices typically strengthen the Canadian dollar, thus putting downward pressure on USD/CAD.
Furthermore, several Federal Reserve officials have recently made hawkish comments, emphasizing a cautious approach until inflation is fully under control. This policy backdrop has limited the downside potential of the dollar, making it difficult for the exchange rate to form a clear downward trend.
Overall, the current exchange rate dynamics exhibit a "two-way balance": oil prices support the Canadian dollar, while policy expectations support the US dollar. This equilibrium between bullish and bearish forces means that USD/CAD currently lacks a clear unilateral driver.
From a daily chart perspective, USD/CAD has recently maintained a range-bound trading pattern, with the price repeatedly testing the 1.3700 area but failing to break through effectively, indicating significant technical resistance at this level. If the exchange rate can hold above 1.3720, it may open up further upside potential and extend towards previous highs.
Conversely, if the price continues to be resisted and falls below 1.3640, it indicates weakening short-term buying momentum, and the exchange rate may retest the medium-term trend support area towards 1.3580 or even 1.3500. Momentum indicators are currently in the neutral range, showing neither overbought nor oversold signals, reflecting a lack of market direction.
The flattening of the moving average system suggests that the current phase is more of a consolidation than a trend advance. Technically, a true directional move will only be confirmed after the price breaks out of the recent trading range. A breakout above 1.3720 with significant volume would strengthen the short-term bullish bias; conversely, a break below 1.3640 could lead to a bearish trend.
Editor's Note:
The current USD/CAD exchange rate movement resembles a patient game. The market isn't lacking in driving factors, but rather is balancing the relative strength of these factors. The support for the Canadian dollar from oil prices and the support for the US dollar from Federal Reserve policy are offsetting each other, leading to lower exchange rate volatility.
Only when a single variable clearly dominates, such as a sudden escalation of geopolitical risks or a significant shift in policy expectations, will prices likely break out of their current consolidation pattern. In the short term, USD/CAD is likely to maintain a range-bound trading pattern, awaiting clearer directional signals from the macroeconomic level.
The market is currently adopting a wait-and-see approach, primarily due to President Trump's upcoming State of the Union address, his first in his second term. The market is focused on his statements regarding the economic outlook, fiscal direction, and geopolitical issues.
If the speech reinforces economic resilience or emphasizes a tightening policy stance, the dollar may find support; conversely, a risk-warning tone could suppress its short-term performance. Meanwhile, the US-Iran nuclear negotiations have entered a crucial phase.
The market remains highly sensitive to the situation in the Middle East, and any signs of escalating tensions could push up crude oil prices. As Canada is a major energy exporter, stronger oil prices typically strengthen the Canadian dollar, thus putting downward pressure on USD/CAD.
Furthermore, several Federal Reserve officials have recently made hawkish comments, emphasizing a cautious approach until inflation is fully under control. This policy backdrop has limited the downside potential of the dollar, making it difficult for the exchange rate to form a clear downward trend.
Overall, the current exchange rate dynamics exhibit a "two-way balance": oil prices support the Canadian dollar, while policy expectations support the US dollar. This equilibrium between bullish and bearish forces means that USD/CAD currently lacks a clear unilateral driver.
From a daily chart perspective, USD/CAD has recently maintained a range-bound trading pattern, with the price repeatedly testing the 1.3700 area but failing to break through effectively, indicating significant technical resistance at this level. If the exchange rate can hold above 1.3720, it may open up further upside potential and extend towards previous highs.
Conversely, if the price continues to be resisted and falls below 1.3640, it indicates weakening short-term buying momentum, and the exchange rate may retest the medium-term trend support area towards 1.3580 or even 1.3500. Momentum indicators are currently in the neutral range, showing neither overbought nor oversold signals, reflecting a lack of market direction.
The flattening of the moving average system suggests that the current phase is more of a consolidation than a trend advance. Technically, a true directional move will only be confirmed after the price breaks out of the recent trading range. A breakout above 1.3720 with significant volume would strengthen the short-term bullish bias; conversely, a break below 1.3640 could lead to a bearish trend.
Editor's Note:
The current USD/CAD exchange rate movement resembles a patient game. The market isn't lacking in driving factors, but rather is balancing the relative strength of these factors. The support for the Canadian dollar from oil prices and the support for the US dollar from Federal Reserve policy are offsetting each other, leading to lower exchange rate volatility.
Only when a single variable clearly dominates, such as a sudden escalation of geopolitical risks or a significant shift in policy expectations, will prices likely break out of their current consolidation pattern. In the short term, USD/CAD is likely to maintain a range-bound trading pattern, awaiting clearer directional signals from the macroeconomic level.
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- 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.
