USD/CAD remains elevated around 1.3865, with the pair consolidating near its recent highs. Even as crude oil prices firmed following fresh geopolitical tensions, the Canadian dollar failed to capitalize. Traders remain cautious due to uncertainty surrounding U.S.-Canada trade relations, particularly with the CUSMA review scheduled for next year. Canadian bond yields have risen, but the loonie is still under pressure from weak domestic data and increasing bearish positioning by institutions.
DXY’s rebound toward 97.778 reflects short-term stabilization, but the broader trend remains under pressure. The index continues to trade below its 50-day moving average, with sellers defending resistance near 98.326. Without a material upside surprise in Thursday’s CPI data, the bounce appears corrective rather than a directional shift. A failure to reclaim the 50-day MA keeps the focus on support at 97.253, and below that, July’s low near 96.374. For now, dollar strength is capped, and bearish bias holds unless the inflation outlook materially improves.
