During the Asian trading session on Friday, the USD/CAD pair saw a slight decline, trading near 1.3675. The US dollar showed relative weakness, primarily pressured by uncertainties surrounding US trade policy.
The US Supreme Court ruled that the emergency powers tariff framework used by the Trump administration did not fully support its trade policy system. However, former US President Donald Trump subsequently announced plans to impose a uniform 15% tariff on imported goods and utilize legislative provisions allowing tariff implementation within 150 days to advance his policy agenda.
This development introduced further volatility signals regarding US trade policy, increasing market uncertainty about the global trade environment. Policy uncertainty typically dampens risk appetite in capital markets and creates periodic pressure on the US dollar.
In labor market developments, US initial jobless claims rose slightly to 212,000, coming in below market expectations of 215,000. This indicates continued resilience in the US job market, which has somewhat limited the dollar's downside potential.
Data released by the US Labor Department shows the labor market remains relatively stable, leading to diverging market views on the Federal Reserve's policy path.
For the Canadian dollar, geopolitical risk developments have become a significant influencing factor. Omani Foreign Minister Badr al-Busaidi stated that significant progress has been made in US-Iran nuclear negotiations, with technical-level talks scheduled to continue next week.
If US-Iran tensions continue to ease, crude oil prices may face downward pressure. As the Canadian dollar, being a commodity currency, often moves in correlation with oil prices, this could potentially weaken the loonie's performance. Overall, US dollar policy uncertainty and Canada's energy export characteristics are creating a hedging effect, maintaining a consolidation pattern for USD/CAD.
Daily chart analysis shows USD/CAD maintains its medium-term consolidation uptrend structure, though the pace of gains has noticeably slowed. The moving average system generally maintains a bullish alignment, but shorter-term averages are beginning to turn downward, indicating weakening short-term momentum.
The MACD indicator shows continued contraction in bullish momentum bars, reflecting a deceleration in the upward trend. The RSI sits near 55, in the neutral-to-strong zone, showing no overbought signals. The Bollinger Band middle band is gradually moving higher, but prices are trading near this middle band area, suggesting the market is entering a phase of directional choice.
Key daily support lies in the 1.3620-1.3600 area, which serves as the short-term bullish defense zone. A break below this level could lead to a retest of the 1.3550 vicinity. Resistance above sits at the 1.3720 and 1.3800 regions, with a break above 1.3800 potentially reopening upward momentum.
The core logic driving current USD/CAD movements involves the interplay between US interest rate advantages and energy price fluctuations. Should US inflation data show another increase, it could reinforce the Federal Reserve's high-interest-rate policy, providing support for the dollar. Conversely, if inflation moderates, the dollar may continue to face pressure.
The Canadian dollar's trajectory depends more heavily on crude oil price movements and geopolitical risk developments. In the short term, the exchange rate is likely to maintain range-bound trading, with sustained directional moves awaiting further clarity from macroeconomic data and policy signals.
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