The Tether USDTUSD/CAD pair demonstrates upward momentum for three straight sessions, currently hovering near 1.3710
Geopolitical uncertainties in the Middle East continue supporting dollar-denominated assets
Central bank officials express cautious optimism about resolving cross-border trade disputes
Thursday's Asian session witnessed the USD/CAD maintaining its recovery trajectory, building on the previous two days' gains. Market participants attribute this movement to dual factors: renewed dollar strength and escalating geopolitical risks following reports of potential US military action against Iran.
Traditional safe-haven flows have bolstered the greenback, with the DXY index climbing toward 99.10. This comes as investors reassess risk exposure amid growing international tensions, creating favorable conditions for USD-denominated instruments.
Domestically, the Federal Reserve maintained its benchmark rate unchanged at 4.25%-4.50% during Wednesday's policy announcement. Officials highlighted concerns about stagflationary pressures stemming from recent trade policy implementations, though stopped short of signaling imminent policy changes.
North of the border, progress appears underway in US-Canada trade relations. Both nations committed to negotiating a bilateral agreement within 30 days during recent G7 discussions. Bank of Canada Governor Tiff Macklem cautioned about inflationary impacts from sustained tariffs but expressed confidence in diplomatic solutions.
From a technical perspective, the pair has rebounded approximately 170 pips from Monday's eight-month trough near 1.3540. The recovery brings prices toward the 20-day exponential moving average at 1.3715, with momentum indicators suggesting potential for further upside.
The 14-day RSI's climb back above 40.00 indicates weakening bearish pressure, though the broader trend remains downward sloping. Key support levels include the psychological 1.3500 handle and the September 2024 low of 1.3420, while resistance appears near late-May highs around 1.3820.
Traders should monitor upcoming economic data releases and geopolitical developments that could influence risk sentiment. The currency pair's direction may hinge on whether the current technical rebound evolves into a sustained trend reversal or proves temporary.
