USD/CAD is currently at 1.4250, having declined from the highs observed on Friday in the 1.4300 range. Weak US Consumer Sentiment data hindered the US Dollar’s rally on Friday. The pair consolidates gains following a nearly 3.5% uptrend in September. The US Dollar has opened the week with a mild bearish tone against the Canadian Dollar, with trading volumes at low levels as the Japanese markets are closed on bank holidays and with the US and Canada also celebrating festivities. The USD/CAD pair has retraced to the 1.4250 region from the 1.4300 peaks observed on Friday, yet continues to consolidate its gains following a rally of approximately 3.5% in September.
US data released last Friday by the University of Michigan indicated that consumer sentiment declined to levels approaching historic lows in October, as the increased cost of living resulting from elevated energy prices is causing frustration among US consumers. In Canada, the employment report for September did not enhance investor sentiment, as the Unemployment Rate rose to 6.5%, up from 6.4% in August, coinciding with a more pronounced decline in net job creation than anticipated. US President Donald Trump declared an energy ceasefire between Russia and Ukraine on Sunday, seemingly without prior consultation with Ukrainian President Volodymyr Zelenski and, to date, lacking confirmation from the Russian side as well.
Brent prices experienced a decline of approximately 2.5% in the wake of the announcement; however, they subsequently regained a significant portion of those losses as further details of the “agreement” emerged. The calendar is sparse today, featuring only the speech of Cleveland Federal Reserve President Beth Hammack as a notable event. Markets are poised for the upcoming release of the US Consumer Price Index and Producer Price Index later this week, which are anticipated to provide additional clarity regarding the Federal Reserve’s monetary policy. The technical picture indicates that the USD/CAD pair is currently positioned midway within the range established over the past fortnight, oscillating between 1.4200 and 1.4300. This movement reflects a consolidation of gains following a significant rally that propelled the pair to a 17-month high in September.
Indicators on the 4-hour chart reveal subdued momentum, as the Relative Strength Index remains slightly above the 50 line and the Moving Average Convergence Divergence is nearly flat around zero. On the upside, surpassing the 1.4300 resistance area (October 9 high), bulls are likely to aim for the early April 2025 highs at 1.4370 and the 1.4410 region. A reversal below 1.4200 (October 2, 6 and 9 lows) would indicate a more pronounced correction, with the September 30 low at 1.4155 and the 38.2% Fibonacci retracement of September’s rally, around 1.4100, serving as the subsequent bearish targets.
