Canadian dollar falls below 1.25

The Canadian dollar continues to push higher and USD/CAD has dropped below the symbolic 1.25 line. The pair is currently trading at 1.2476 and is close to 1.2553, its lowest level since November 10th.

US Treasury rates continue to move higher. After punching past 1.80% on Tuesday, a 2-year high, the 10-year rate has climbed to 1.90%. The 10-year rate hasn’t been above the symbolic 2% level since July 2019, but it looks poised to climb above that line shortly. The jump in US yields is reflective of market concerns that the Fed will accelerate its tightening. Last week, FOMC member Patrick Harker said that the Fed could raise rates three or four times this year. That was not big news, but the markets paid attention when JP Mogan’s CEO Jamie Dimon weighed in and stated that the Fed might hike six or seven times. Higher yields should provide a boost for the US dollar.

Will Canada CPI be a market-mover?

Canada will release CPI data for December later in the day. The headline reading is expected in at 4.8%, while core CPI is forecast at 3.5%. These inflation readings will be carefully monitored by the BoC and could be a market-mover for the Canadian dollar. If the inflation reports prove to be a big miss, the Canadian dollar could lose ground, as expectations that the BoC will raise rates next week would ease. Conversely, strong reading will provide support for the bank to raise rates next week, which is bullish for the Canadian dollar.

Oil prices are a key driver for the Canadian dollar, and the recent jump in oil prices has helped boost the currency, with USD/CAD falling by 1.33% in January. With geopolitical tensions rising in the Persian Gulf and Ukraine, oil could head closer towards the USD 100 level, which would be great news for the Canadian dollar.


USD/CAD Technical

    • USD/CAD is testing support at 1.2513. Below, there is support at 1.2396
    •  There is resistance at 1.2762 and 1.2879


Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at Visit to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.