Core Viewpoint - The USD/CAD currency pair is experiencing fluctuations near a three-month low, influenced by the recent weak performance of the USD and ongoing assessments of the US interest rate outlook for 2026 [1] Group 1: USD Performance - The US Dollar Index, which measures the dollar against six major currencies, is trading cautiously near an eight-week low of 98.13, with limited overall volatility [3] - Market expectations indicate a 64.3% probability of at least two interest rate cuts by US authorities by the end of 2026, although the dot plot suggests a decline in the federal funds rate to 3.4% by that time [4] - Current market sentiment towards a more accommodative US interest rate policy is linked to a weak labor market, with investors awaiting the November non-farm payroll data for insights into the employment situation [4] Group 2: CAD Performance - The Canadian dollar has shown strong performance against major trading partners in recent days, attributed to market expectations regarding the Bank of Canada's policy [4] - The Bank of Canada is not expected to implement further interest rate cuts in the short term, as indicated in its recent monetary policy statement, which suggests current rates are appropriate for maintaining inflation near the 2% target [4] - Key economic data, specifically the November Canadian Consumer Price Index (CPI), is set to be released, with market predictions indicating a core CPI year-on-year increase of 2.4%, up from 2.2% in October, which will significantly impact CAD exchange rate movements [5]

Core Viewpoint - The USD/CAD currency pair is experiencing narrow fluctuations, with the USD recently hitting its lowest level since September 17, driven by diverging monetary policies between the Federal Reserve and the Bank of Canada [1][3]. Group 1: Monetary Policy Divergence - The Federal Reserve's dovish shift is a primary factor pressuring the USD, with market expectations for more rate cuts next year following comments from Chairman Jerome Powell [3]. - The Fed's official forecast indicates only one more rate cut by 2026, while the market has already priced in a more accommodative stance, weakening the USD's interest rate advantage [3]. - In contrast, the Bank of Canada's hawkish stance supports the CAD, with Governor Tiff Macklem stating that current interest rates are appropriate, signaling the end of the rate-cutting cycle [3]. Group 2: Oil Price Impact - The CAD's upward momentum is being restrained by fluctuations in oil prices, which are closely linked to the CAD's performance [5]. - International oil prices have significantly dropped this week, reaching their lowest level since October 21, impacting Canada's energy export expectations and limiting the CAD's appreciation potential [5]. - The uncertainty surrounding oil prices, influenced by geopolitical risks and OPEC+ policies, may lead to volatility in the CAD exchange rate [5]. Group 3: Technical Analysis - The USD/CAD has broken through key support levels, with short-term moving averages indicating a bearish trend [5]. - The RSI indicator shows oversold conditions but has not yet reached a bottom, suggesting ongoing downside risks [5]. - A drop below the 1.3750 level could lead to further declines towards the 1.3700 mark, while resistance is noted around 1.3820, which must be reclaimed to alleviate short-term bearish pressure [5].