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October 15, 2025

USD/CAD Falls Below 1.4030 as Powell Flags Labour‑Market Risks

Market snapshot

USD/CAD traded down to session lows below 1.4030 after Fed Chair Jerome Powell said the Fed is more worried about labour‑market deterioration than inflation, a remark that reinforced market bets on rate cuts in the coming months. The US dollar weakened broadly, equity and fixed‑income moves pushed real yields lower, and safe havens such as gold received fresh support.

Why the dollar weakened — the macro drivers

Powell's comments shifted the policy risk premium: markets now price a higher probability of easing later this year (see Fed‑cut odds surge), which puts downward pressure on the US Dollar Index (DXY). Delayed or missing US data because of the government shutdown and a flurry of Fed speakers ahead of the October CPI (due Oct 24) have left the dollar vulnerable to further repricing.

At the same time, geopolitical and commodity‑market developments (notably renewed US–China trade tensions and mixed oil signals) create cross‑asset spillovers. The IEA's warning about a potential 2026 oil supply surplus and WTI trading around $58 are particularly relevant for CAD, given Canada’s oil exposure.

USD/CAD technical picture and trade considerations

Price action: USD/CAD moved from Tuesday highs near ~1.4080 to session lows below 1.4030. That intraday swing highlights the currency's sensitivity to US policy commentary and short‑term risk sentiment; for related oil‑driven moves see USD/CAD slides below 1.4000.

Key technical levels:

  • Immediate support: ~1.4030 (recent session lows).
  • Near resistance: ~1.4080 (Tuesday's high).
  • Wider resistance: 1.4150–1.4200 (prior consolidation zone).

Trade idea (tactical): while Powell's dovish tone remains the dominant driver, traders can consider short USDCAD on confirmed downside momentum, with a stop above 1.4085–1.4100 and an initial target near 1.3950–1.3900. Because oil and BoC policy can quickly reverse the move, use tight risk controls and stagger size when entering.

Risks to this view include stronger‑than‑expected US labour or inflation prints that reprice Fed cuts, or a sudden CAD move driven by oil (e.g., an unexpected API/EIA draw or OPEC+ policy shift). To manage these risks consider smaller position sizing and clearly defined stop losses — or use automated trading to enforce discipline.

Gold (XAU/USD) — beneficiary of a softer dollar

Gold responded positively to the weaker dollar and lower real yields. XAU/USD extended its rally and traded around the psychologically and technically important area near $4,100. Traders should note that daily RSI readings are stretched and near overbought levels, increasing the chance of short‑term mean reversion.

Key technicals and tactics:

  • Immediate support cluster: $4,100 and a second band at $4,060–4,055 (4‑hour trendline + 50 SMA).
  • Downside scenario: a convincing break below $4,055 could open a pullback toward $4,000.
  • Upside momentum would resume on a sustained break above recent highs, targeting the next round levels from recent price action.

Given gold’s sensitivity to US monetary policy expectations and real yields, consider tactical long exposures on dips toward $4,100–$4,060 while risking to a close below $4,055. For traders who monitor multiple markets, pairing a short USD/CAD exposure with a long XAU/USD allocation can capture the recurring theme of a softer USD.

Cross‑market watch: oil and crypto

Oil: WTI around $58.25 and the IEA's projection of a potential 2026 supply surplus are a near‑term headwind for oil prices. If oil weakens further, CAD could underperform and limit USDCAD downside — a reminder to monitor API/EIA inventory prints and OPEC+ commentary before scaling into FX trades.

Crypto note: BTC retested the 78.6% Fib near ~$115k, failed and pulled back to ~$112.8k. Elevated crypto volatility and recent liquidations highlight the importance of robust risk management if you trade across asset classes or employ cross‑asset strategies.

How traders can implement these ideas (tools and risk controls)

Active retail traders can benefit from mixing discretionary analysis with disciplined execution. Practical steps:

  • Predefine size and stops: avoid discretionary size increases after a move is already underway.
  • Use time‑based exits and partial profit‑taking to lock gains in volatile environments.
  • Monitor catalysts: upcoming US CPI (Oct 24), delayed jobs data releases, Fed speakers and the weekly API/EIA inventory reports.

For traders who prefer a rules‑based approach, consider automated trading solutions. A dedicated Forex Trading Bot can run predefined USDCAD strategies 24/5, while the Trade Assistant Bot helps with signal execution and risk enforcement. Automated trading and AI trading bot strategies reduce emotional errors and can maintain consistency across fast moves.

Bottom line and next steps

Powell’s labour‑market concerns have shifted the market narrative toward easing, weighing on the US dollar and creating tactical opportunities in USD/CAD and gold. However, oil dynamics and potential US data surprises remain key risk factors that could quickly change the setup.

If you trade these themes, blend macro awareness with strict risk controls. For execution, consider automated trading to apply systematic position sizing and stops across sessions — whether you’re focused on forex trading or cross‑asset strategies that include crypto trading and commodities.

Try it live

To test systematic approaches, visit PlayOnBit and explore automated solutions such as the Forex Trading Bot or the Trade Assistant Bot. These tools make it easier to backtest, deploy and monitor strategies that target FX pairs like USD/CAD and safe‑haven instruments such as XAU/USD. Whether you trade spot FX, crypto trading or commodities, an AI trading bot can help enforce rules and manage risk — try a demo or start a trial on PlayOnBit to see how automated trading can complement your process.