USDCAD retreated more than 1 cent lower yesterday after the 1.5 cent surge following the FED hawkish cut, but found support and is bouncing higher now after the positive US Home Sales and Unemployment Claims which confirm that the US economy is doing well.

USD/CAD, already in a strong uptrend, surged earlier this week, breaking above 1.43. This rally was fueled by a weaker-than-expected Canadian CPI inflation report, which kept pressure on the Bank of Canada to maintain its path of easing interest rates. Annual consumer inflation came in at 1.9%, falling short of the BoC’s 2.0% target, with notable deflation observed in sectors like furniture (-2.2% YoY) and textiles (-3.8% YoY).

USD/CAD Chart H1 – The 50 SMA Held As Support

Further momentum came from the Federal Reserve’s aggressive rate cut and DOT Plot projections, which signaled fewer rate cuts in 2025. This pushed the USD higher, driving USD/CAD up by 1.5 cents to a peak of 1.4466. However, the pair retreated earlier today to the 1.4340 range, where the 50 SMA on the H1 chart provided support.

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A buy signal was initiated at this level, and the price has since reversed higher, resuming its bullish trend. This recovery gained further support from U.S. economic data, with unemployment claims coming in below expectations and existing home sales surpassing 4 million for the first time since June.

Weekly Initial and Continuing Claims Data

• Initial Jobless Claims:
  • Current: 220K vs 230K expected.
  • Prior week: 242K (revised to 220K).
  • 4-week moving average: 225.5K vs 224.25K previous week.
• Continuing Claims:
  • Current: 1.874M vs 1.890M expected.
  • Prior week: 1.886M (revised to 1.879M).
  • 4-week moving average: 1.880M vs 1.886M last week.

After last week’s notable increase, the latest weekly data shows a return to a decline, suggesting that calendar effects or external factors might be contributing to short-term fluctuations. Meanwhile, with home sales reaching their highest level since March 2024, the data underscores the ongoing resilience of the housing market. However, the outlook remains uncertain as 30-year mortgage rates in the US edge back toward the 7% mark, a level that could pose challenges for the market’s future momentum.

USD/CAD Live Chart

USD/CAD

Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst.
Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank’s local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.