USD\/CAD edged lower in the Asian session on Wednesday but stayed near the monthly high reached on Tuesday. The pair traded just below 1.3700, down 0.05%, as markets waited for a speech from US President Donald Trump.<\/p>\n
Trump is due to deliver the first State of the Union address of his second term at 02:00 GMT. The speech is expected to centre on the economy and trade uncertainty, and it will also address Iran ahead of a third round of nuclear talks on Thursday.<\/p>\n
Concerns about a possible US military strike on Iran supported crude oil prices before the talks. Higher oil prices supported the Canadian dollar and limited USD\/CAD gains.<\/p>\n
Hawkish remarks from several Federal Reserve officials helped the US dollar stay firm below its highest level since 23 January, reached last week. This helped limit further declines in USD\/CAD.<\/p>\n
In the North American session, markets are expected to react to more comments from Fed officials. Traders are also watching for a clear break from the past week\u2019s range before expecting a stronger near-term move.<\/p>\n
Looking back a year to early 2025, we saw the market stuck in a holding pattern around the 1.3700 level for USD\/CAD. The primary focus then was on geopolitical uncertainty, with traders anxiously awaiting a State of the Union address and developments in US-Iran nuclear talks. This left the pair range-bound as hawkish Federal Reserve comments battled against rising oil prices.<\/p>\n
The landscape today in February 2026 is driven less by speeches and more by clear economic data and central bank actions. The key divergence is that the Bank of Canada initiated an interest rate cut last month to 4.75%, citing a cooling economy, while the Federal Reserve has held its benchmark rate steady. This growing policy gap provides a fundamental tailwind for the US dollar over the loonie.<\/p>\n
Oil’s influence has also shifted from the acute geopolitical risk premium we saw in 2025. WTI crude prices are currently stable near $85 per barrel, supported more by coordinated OPEC+ production discipline than by fears of an imminent military conflict. This stability provides a floor for the Canadian dollar but is not a strong enough catalyst to reverse the trend driven by interest rates.<\/p>\n
Given this context, derivative strategies should focus on the widening policy divergence. We should consider buying USD\/CAD call options to position for further upside, as recent US inflation data suggests the Federal Reserve will be in no hurry to cut rates. Using bull call spreads could be a cost-effective method to express this view while managing premium costs, especially with the pair currently trading near 1.3850.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" USD\/CAD slipped below 1.3700 near monthly high as markets awaited Trump, Fed remarks, and oil strength.<\/p>\n","protected":false},"author":62,"featured_media":16960,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-43572","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/43572","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=43572"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/43572\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/16960"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=43572"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=43572"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=43572"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}