The USD/CAD pair edged lower by 0.12% to around 1.4030 during Monday’s Asian session, as the Canadian dollar (CAD) gained momentum on stronger domestic fundamentals and improved global risk sentiment. The Loonie extended its advance from last week, supported by robust Canadian employment data and easing concerns over the prolonged US federal government shutdown.
Canadian Dollar supported by strong labor market data
The CAD continued to benefit from upbeat labor market figures released on Friday, which showed solid employment gains in October. The data highlighted the resilience of Canada’s job market despite global economic uncertainty, bolstering expectations that the Bank of Canada (BoC) could maintain a cautious stance on monetary policy for now. The strength in the domestic labor market has provided the Loonie with a near-term advantage over the US dollar.
USD pressured as shutdown deal nears
Meanwhile, the US dollar (USD) came under mild pressure as investors grew optimistic that US lawmakers are nearing a deal to end the federal government shutdown. According to Bloomberg, a group of centrist Senate Democrats agreed to support a proposal that would reopen the government and fund several agencies through next year. The development eased investor anxiety, prompting a modest shift away from the safe-haven USD.
Oil prices offer additional tailwinds for CAD
Crude oil prices—one of Canada’s key exports—remained firm on Monday, lending further support to the commodity-linked CAD. Expectations of tighter global supply and signs of stabilizing demand in China have underpinned oil prices in recent sessions, adding to the Loonie’s strength.
Technical outlook: USD/CAD faces short-term downside risk
From a technical perspective, USD/CAD remains under mild selling pressure, trading just above the 1.4000 psychological level. A sustained break below this area could expose further downside toward 1.3960 and 1.3920. On the upside, initial resistance is seen around 1.4075, followed by the weekly high near 1.4140. A move above these levels would be needed to shift the near-term bias back in favor of the US dollar.
