USD/CAD Drops to 1.3450 as Dovish Fed Outlook Weighs on Greenback

USD/CAD has declined 0.6% to 1.3450 as the US dollar weakens amid increasingly dovish Federal Reserve communications, while the Canadian dollar finds support from stable oil prices around $78 per barrel. Fed officials have signaled greater openness to rate cuts if labor market conditions deteriorate, shifting market expectations toward a September easing. The Bank of Canada's recent pause in its cutting cycle at 4.5% has provided additional support for the loonie, as policymakers assess the impact of previous rate reductions on inflation dynamics. Canadian GDP data showed 0.2% monthly growth, exceeding forecasts and reinforcing the BoC's cautious stance. Technical indicators suggest USD/CAD has broken below the key 1.3500 support level, opening the path toward 1.3400. Oil price stability near current levels continues to underpin CAD strength, while any surprise hawkishness from the BoC could accelerate the pair's decline.