FX.co ★ PipsHunter99 | USD/CAD

Technical and Fundamental Analysis of the USD/CAD Pair The USD/CAD exchange rate fell for a second consecutive session, trading near 1.4215 during the Asian trading period. The latest decline followed comments from US President Donald Trump, who said on social media that Washington was making “productive plans” with Iran and would avoid attacking the country before the midterm elections. The remarks eased immediate geopolitical concerns, reducing demand for the US dollar as a safe-haven asset and adding pressure to the dollar-loonie pair. Despite the recent pullback, expectations for Federal Reserve policy continue to influence the outlook for the greenback. CME market pricing puts the probability of a rate increase of at least 25 basis points at the upcoming policy meeting near 17.7%, down from 38% a week earlier. However, markets still assign an approximately 83% probability to a December rate hike, suggesting that expectations for tighter monetary policy later in the year remain firmly in focus. Recent comments from Fed official Musalem indicate that policymakers remain focused on returning inflation to the 2% target. His FXS SpeechTracker score of 7.3/10, slightly above the historical average of 7.2/10, reflects a message favoring continued policy restraint rather than a major shift in direction. His view that policy may need to move closer to a restrictive setting reinforces the possibility that US interest rates could remain elevated for longer. Musalem also described economic activity as broadly consistent with expectations and financial markets as balanced and stable. His remarks on artificial intelligence investment, resilient demand, and the durability of economic growth suggest that the economy may continue to withstand relatively high borrowing costs. This could provide support for the dollar if investors maintain expectations for restrictive monetary policy and elevated real yields. The FXS US news sentiment index slipped by 0.25 points to 138.33. Although the reading eased slightly, it remains well above the neutral threshold of 100, indicating that the broader policy narrative continues to favor restrictive monetary conditions. This is consistent with Musalem’s emphasis on maintaining sufficient pressure to bring inflation sustainably lower. Federal Reserve Governor Christopher Waller has also delivered a relatively hawkish message, earning an FXS SpeechTracker score of 8/10 compared with the historical average of 7.2/10. His remarks have highlighted the importance of maintaining an appropriately restrictive policy stance, while the timing and need for further rate increases remain dependent on economic conditions. Continued investment in artificial intelligence and energy infrastructure, alongside expectations for resilient growth in the second half of 2026, could influence the Fed’s assessment of economic momentum. The FXS US opinion index rose by 0.42 points to 138.34, remaining above the neutral threshold and aligning with the elevated SpeechTracker reading. Together, these indicators point to a policy environment that could continue supporting the dollar over the medium term, even if short-term geopolitical developments trigger further volatility. For the Canadian dollar, the outlook is complicated by movements in crude oil. Lower oil prices following Trump's comments could weigh on the commodity-linked CAD and limit USD/CAD losses. Trump also said that substantial crude oil volumes were moving through the Strait of Hormuz, while emphasizing that the US maritime blockade of Iranian ports would remain in place. Developments involving Iran, global oil supply, and energy prices therefore remain important drivers for the pair. On the H4 chart, USD/CAD remains within a broader bullish structure despite its recent retreat. The pair previously advanced toward yearly highs around 1.4290–1.4300 before losing momentum and entering consolidation. Price continues to trade above the H4 20 SMA in the mid-1.41 region and the 50 SMA near the upper 1.39s, indicating that the intermediate uptrend remains intact. The first major demand zone lies between 1.4190 and 1.4210. Buyers have repeatedly defended this region during previous pullbacks, while its proximity to last week's low and the psychological 1.4200 level strengthens its importance as support. On the upside, H4 supply is concentrated between 1.4260 and 1.4295. This zone contains recent session highs and aligns with the 61.8% retracement of the previous major decline. Repeated selling pressure here has limited further gains and kept the pair within its current range. The H1 chart presents a more cautious short-term picture, with price fluctuating below the 20 SMA while the 50 SMA offers nearby support. A sustained H1 close above the 20 SMA could encourage a recovery toward the 1.4260–1.4295 resistance zone. Conversely, a decisive break below 1.4190–1.4200 would weaken the current structure and expose the next demand area around 1.4145–1.4150, where the rising H4 20 SMA and previous structural lows converge.