The USD/CAD pair trades in a tight range around 1.4400 in Friday’s European session. The Loonie pair consolidates as trading activity has muted in a holiday-curtailed week. The US Dollar (USD) trades sideways, but its outlook remains broadly firm on expectations that the Federal Reserve (Fed) will take a slower path of interest rate cuts compared with other central banks.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, oscillates above 108.00.

In the latest monetary policy meeting, the Fed signaled two interest rate cuts for 2025. Officials are confident about the United States (US) economic outlook and labor market conditions appear better than previously anticipated.

Meanwhile, the broader outlook for the Canadian Dollar (CAD) remains weak, as the Bank of Canada (BoC) has followed an aggressive policy-easing spell this year. The BoC has reduced interest rates by 175 basis points (bps) to 3.25% this year and is expected to cut further, as officials are worried about growing economic risks.

USD/CAD has shown a stalwart rally after a breakout of the Ascending Triangle chart pattern on a weekly timeframe. Upward-sloping 20-day Exponential Moving Average (EMA) near 1.4000 suggests that the overall trend is bullish.

The 14-day Relative Strength Index (RSI) oscillates in the bullish range of 60.00-80.00, suggesting that a strong upside momentum is intact.

The rally in the Loonie pair could advance to the psychological resistance of 1.4500 and Mar 2020 high of 1.4668 if the asset breaks above the previous week high of 1.4433.

On the contrary, a downside move below the December 11 low of 1.4120 could drag the asset towards the December 4 high of around 1.4080, followed by the psychological support of 1.4000.

USD/CAD weekly chart

(Click on image to enlarge)

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