USD/CAD trades near five-month lows as BoC-Fed policy divergence favours the Loonie

💡 DMK Insight

The CAD’s resilience against a firm USD signals potential shifts in market sentiment. With USD/CAD trading around 1.3675, it’s important to note that this level is near a significant support point, last seen in late July. Traders should be cautious as the market enters holiday mode, which often leads to lower liquidity and increased volatility. If the CAD continues to hold its ground, it could indicate underlying strength, possibly driven by Canadian economic data or shifts in oil prices, given Canada’s heavy reliance on energy exports. Conversely, if USD strength persists, a break below 1.3670 could trigger further selling pressure on the CAD. Look for any economic releases from Canada or the U.S. that could impact this pair, especially in the coming days. The real story is whether the CAD can maintain its gains or if the USD will overpower it as we approach the end of the month. Keep an eye on the 1.3700 resistance level for potential reversals or breakouts.