The US Dollar has come under pressure since Moody’s credit rating downgrade last Friday, weighing on its performance at the start of Week 21. Despite an upside surprise in Canada’s CPI data, the Canadian Dollar has struggled, gaining only against the USD and AUD.
US equity indices have also been trending lower, with the Russell 2000 leading losses—down 2.76% for the week—followed by the Dow Jones Industrial Average, which has declined 1.93%.
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US Dollar Mid-Week Performance vs Majors
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USD vs other Majors, May 21, 2025 – Source: TradingView.
The Greenback has been taking a hit from the most recent Moody’s Credit Agency downgrade from Aaa to Aa1. Fitch and S&P have downgraded the American Credit Rating before, and Moody was the last one standing.
This has sent US Yields up, with the 30Y right now at 5% vs 4.9% a month ago. Usually, higher yields tend to attract flows to the USD but not in this environment.
European currencies have appreciated the most this week, even after the most recent BoE cut and a bad surprise from the UK CPI, continuing flows from Q1.
Canadian Dollar Mid-Week Performance vs Majors
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CAD vs other Majors, May 21, 2025 – Source: TradingView.
The Loonie has been lagging versus most of its Major counterparts. A beat on the Canadian CPI was welcomed by the Bank of Canada, as cutting efforts led to a surprise beat (1.7% y/y vs 1.6% exp.).
This has reduced cutting odds for the upcoming June Meeting from 65% to about 30%.
The CAD is mostly unchanged or down small vs GBP, NZD, JPY.
CHF and EUR are beating the Canadian Dollar by about 0.5%.
On the other hand, the CAD is profiting from weakness in the AUD, up 0.38% against the Aussie and up 0.9% against the USD.
Intraday Technical Levels for the USD/CAD
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USD/CAD 1h Chart, May 21, 2025. Source: TradingView
USD/CAD has been rejecting the 1.40 psychological level to start this week with prices forming lower highs.
Today has been particularly volatile though after a rough morning session for the Greenback, followed by a decent rally in the past few hours.
Key technical levels to look out for:
- S1: 1.3810 to 1.3820
- S2: 1.3790 to 1.3800
- S3: 1.3768 to 1.3780 (beginning of May lows)
- R1: 1.3870 to 1.3880 – MA 20 at 1.38720
- R2: 1.39100 to 1.39200 – MA 50 at 1.39130
- R3: 1.39600 to 1.39700
US and Canada Economic Calendar for the Rest of the Week
Thursday 22nd will be important to watch with PMI releases for the US coming at 8:30 A.M ET, and a speech from BoC Governor Macklem at 2:30 P.M.
Friday 23 will be less eventful with Canadian Retail Sales Release and a few speeches from FED Speakers with Musalem, Schmid and Cook – All are voters for this year.
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Calendar for US and Canadian Events for Thursday 22 and Friday 23.
MarketPulse Economic Calendar (click to enlarge)
Safe Trades!
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