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The USD/CAD currency pair is experiencing downward pressure, hovering around the 1.3800 level as the US Dollar weakens amid escalating political and economic uncertainties. Political interference concerns, renewed criticism from US President Donald Trump, and looming tariff threats are creating a challenging environment for the greenback. Coupled with bearish technical indicators, the pair appears poised for further declines, with key resistance levels and market dynamics shaping its trajectory.
Political Headwinds Batter the US Dollar
On Monday, the USD/CAD pair continued its descent, driven by a confluence of political and economic factors undermining the US Dollar. President Trump intensified his critique of Federal Reserve Chair Jerome Powell, accusing the central bank of cutting rates in late 2024 for political motives. This renewed attack on Fed independence, just weeks before the central bank’s May policy meeting, has heightened market unease. With no rate changes expected at the upcoming meeting, the political rhetoric is amplifying uncertainty. Additionally, Chicago Fed President Austan Goolsbee highlighted rising short-term inflation expectations, signaling caution in monetary policy adjustments. These domestic pressures are compounded by global trade tensions, as the Trump administration’s tariff discussions face resistance from major partners ahead of the G20 meetings in Washington. The resulting risk-off sentiment is bolstering the Canadian Dollar, despite softening crude oil prices.
Technical Analysis Points to Bearish Momentum
From a technical perspective, USD/CAD exhibits a distinctly bearish structure. The pair is trading within a daily range of 1.3781–1.3852, with immediate resistance at 1.3805, followed by stronger levels at 1.3934 and 1.3938. The Relative Strength Index (RSI) at 31 indicates neutral momentum but leans bearish, teetering on the edge of oversold territory. The Moving Average Convergence Divergence (MACD) is flashing a clear sell signal, reinforced by a negative Momentum (10) reading of -0.0444. While the Awesome Oscillator remains neutral at -0.0346, the broader trend is supported by bearish signals from both short- and long-term moving averages. The 10-day Exponential Moving Average (EMA) at 1.3934 and the 10-day Simple Moving Average (SMA) at 1.3938 align with the bearish outlook, while broader trend averages—20-day SMA at 1.4103, 100-day SMA at 1.4278, and 200-day SMA at 1.4006—further underscore the downside bias.
Outlook and Key Levels to Watch
The USD/CAD pair faces a challenging path ahead as political pressures and bearish technical signals converge. The combination of Trump’s criticism of the Fed, trade policy uncertainties, and cautious signals from Fed officials is weighing heavily on the US Dollar. Meanwhile, the Canadian Dollar is finding support in the broader risk-off market environment. Traders should monitor resistance levels at 1.3805, 1.3934, and 1.3938 for potential reversal points, while the bearish technical indicators suggest that downside risks remain prominent. As global trade discussions and Fed policy expectations evolve, the USD/CAD pair is likely to remain volatile, with the balance tilted toward further weakness in the near term.
