USD/CAD trades near 4-month high
Yesterday, USD/CAD fell, drawing a bearish candle after the previous day's bullish one. The current price is around 1.39146, down from a high of 1.39479.
Over the week, the USD/CAD movement has tended to be a strong tug-of-war between USD dominance and oil support for the Canadian dollar. Tensions in the Middle East, involving the war between the US, Israel, and Iran, have increased demand for safe-haven assets, which traditionally support a stronger USD. The US-Israel and Iran conflicts have increased risk aversion, increasing demand for the USD. This is the most dominant factor at this time.
The Fed maintained interest rates in the 2.5%-3.75% range at its March 2026 meeting. The latest Non-farm payroll data showed the US an increase of 216,000 jobs, with unemployment at a low 3.9%, reinforcing the Fed's hawkish stance to delay a rate cut.
WTI oil prices are currently hovering around $95 due to supply disruptions in the Strait of Hormuz. Because Canada relies on oil as a major export commodity, rising oil prices have prevented the CAD from weakening further against the USD.
The Canadian economy showed weakness, as evidenced by the Services PMI, which contracted to 47.3. The trade deficit has slowed sharply, putting pressure on the CAD. The Bank of Canada (BoC) is adopting a wait-and-see approach, currently holding interest rates at 2.25%. There is a wide interest rate differential of around 1.25%-1.50% with US interest rates, which encourages investors to hold USD over CAD.
The Canadian economy is adjusting to several trade restrictions from the US, which are expected to reduce Canadian GDP growth to around 1.1% in 2026.
Market sentiment is currently bullish due to the US-Canadian interest rate differential. However, be wary of today's economic data releases from the US and Canada or a sudden spike in oil prices, as the CAD is highly sensitive to energy prices, which could trigger a correction in the CAD's recovery.
USDCAD price forecast: nearest support around 1.3880, with the next support target around 1.3825. Pivot point 1.3920. Immediate resistance is around 1.3965, with the next resistance target around 1.4020. This forecast could be wrong.
Yesterday, USD/CAD fell, drawing a bearish candle after the previous day's bullish one. The current price is around 1.39146, down from a high of 1.39479.
Over the week, the USD/CAD movement has tended to be a strong tug-of-war between USD dominance and oil support for the Canadian dollar. Tensions in the Middle East, involving the war between the US, Israel, and Iran, have increased demand for safe-haven assets, which traditionally support a stronger USD. The US-Israel and Iran conflicts have increased risk aversion, increasing demand for the USD. This is the most dominant factor at this time.
The Fed maintained interest rates in the 2.5%-3.75% range at its March 2026 meeting. The latest Non-farm payroll data showed the US an increase of 216,000 jobs, with unemployment at a low 3.9%, reinforcing the Fed's hawkish stance to delay a rate cut.
WTI oil prices are currently hovering around $95 due to supply disruptions in the Strait of Hormuz. Because Canada relies on oil as a major export commodity, rising oil prices have prevented the CAD from weakening further against the USD.
The Canadian economy showed weakness, as evidenced by the Services PMI, which contracted to 47.3. The trade deficit has slowed sharply, putting pressure on the CAD. The Bank of Canada (BoC) is adopting a wait-and-see approach, currently holding interest rates at 2.25%. There is a wide interest rate differential of around 1.25%-1.50% with US interest rates, which encourages investors to hold USD over CAD.
The Canadian economy is adjusting to several trade restrictions from the US, which are expected to reduce Canadian GDP growth to around 1.1% in 2026.
Market sentiment is currently bullish due to the US-Canadian interest rate differential. However, be wary of today's economic data releases from the US and Canada or a sudden spike in oil prices, as the CAD is highly sensitive to energy prices, which could trigger a correction in the CAD's recovery.
USDCAD price forecast: nearest support around 1.3880, with the next support target around 1.3825. Pivot point 1.3920. Immediate resistance is around 1.3965, with the next resistance target around 1.4020. This forecast could be wrong.
I trade at FXOpen
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