The USD/CAD pair struggled to gain traction during Monday’s Asian session, remaining range-bound around the 1.3965-1.3970 level and showing little movement amid a mix of fundamental influences.
A softer start to crude oil prices weighed on the commodity-linked Canadian Dollar (CAD), providing support to the USD/CAD pair. However, renewed selling pressure on the US Dollar (USD) restrained aggressive upside bets and capped gains for the currency pair.
Market sentiment remains anchored by expectations that the Federal Reserve will continue cutting interest rates in response to easing inflation and the prospect of multiple quarters of sluggish US economic growth. Adding to the dollar’s pressure, Moody’s recent surprise downgrade of the US government’s credit rating has further dampened USD strength, limiting USD/CAD upside.
On the diplomatic front, US Vice President JD Vance met with Canadian Prime Minister Mark Carney on Sunday to discuss fair trade policies, raising hopes for a potential US-Canada trade deal. This development supports the Canadian Dollar and calls for caution among traders betting on further USD/CAD advances.
Looking ahead, Monday’s calendar is light on major economic releases from both the US and Canada. Instead, market participants will closely monitor speeches from key Federal Open Market Committee (FOMC) members, which could provide fresh impetus to the USD and influence USD/CAD price action. Additionally, fluctuations in crude oil prices are expected to create short-term trading opportunities for the pair.
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