USD/CAD Weakens Below 1.3750 as Bearish Momentum Persists

USD/CAD Outlook: Bearish Momentum in Focus Below 1.3750

June 25, 2025 – Forex Market Update
The USD/CAD currency pair continues to trade under pressure, hovering around 1.3720 in early European hours on Tuesday. The pair is trending lower as traders respond to both geopolitical easing and dovish signals from the US Federal Reserve.

Ceasefire Weakens USD Safe-Haven Demand

The announcement of a ceasefire between Iran and Israel, following four waves of Iranian missile attacks, has cooled safe-haven demand. As geopolitical tensions ease, risk appetite has returned, weakening the US Dollar (USD) and supporting commodity-linked currencies like the Canadian Dollar (CAD).

Fed's Dovish Tone Adds Downward Pressure

Further pressure on the USD comes from comments by Fed Governor Michelle Bowman, who stated on Monday that she would support a July rate cut if inflation remains subdued. Her dovish stance is aligned with other Federal Open Market Committee (FOMC) members, suggesting increased odds for upcoming monetary easing.

Technical Outlook: Bearish Bias Intact

• USD/CAD is trading below the 100-day EMA, reinforcing the bearish trend.
• The 14-day Relative Strength Index (RSI) sits near 47.75, staying below the neutral 50 level.
• Initial support lies at 1.3635, while first resistance is seen at 1.3820.

These signals suggest that the pair could extend its losses in the near term unless it reclaims key resistance levels.

What’s Next?

• Keep an eye on Fed Chair Powell’s testimony later today for potential USD volatility.
• Monitor oil price trends, as they directly impact the CAD.
• Watch for Canadian GDP and US inflation data later this week for further cues.

Related Reads on Tredu.com:

• WTI Oil Prices Slip as Ceasefire Eases Supply Concerns
• USD/CHF Below 0.8100: Dollar Slides on Rate Cut Bets
• NZD/USD Near 0.6000 on Fed Dovish Comments