USD/CAD Price Forecast: Rallies to 1.3970, fresh high since November 2025 on Oil slump
The USD/CAD pair attracts fresh buyers following an intraday dip to the 1.3930 area on Thursday and builds on the overnight bounce from the weekly low. The momentum lifts spot prices to the 1.3970 region, or the highest since December 2025, during the first half of the European session, and is sponsored by an intraday decline in Crude Oil prices, which tends to benefit the commodity-linked Loonie.
Despite renewed hostilities between the US and Iran, reports suggest that diplomatic efforts towards a permanent peace deal are still on track. This keeps hopes alive for a resolution to end the over three-month-old war, which, in turn, is seen as a key factor exerting downward pressure on Crude Oil prices. Adding to this, the Bank of Canada (BoC) maintained a dovish stance as policymakers are prioritizing a sluggish economy over inflation threats. This, in turn, is seen exerting heavy pressure on the Canadian Dollar (CAD) and acting as a tailwind for the USD/CAD pair.
Meanwhile, the aforementioned supporting factors largely offset a modest US Dollar (USD) downtick, led by easing concerns over a runaway inflation spiral following the release of a soft US Consumer Price Index (CPI) on Wednesday. Nevertheless, traders are still pricing in a 70% chance that the US Federal Reserve (Fed) will raise interest rates by the end of this year. This, along with persistent geopolitical uncertainties stemming from the ongoing Middle East crisis, should act as a tailwind for the USD and back the case for a further appreciation for the USD/CAD pair.
Even from a technical perspective, spot prices hold well above the 200-day Simple Moving Average (SMA), retaining a bullish near-term bias and keeping the broader uptrend supported. Moreover, momentum indicators remain constructive but slightly stretched. In fact, the Moving Average Convergence Divergence (MACD) indicator stays in positive territory, hinting that upside pressure persists. That said, the Relative Strength Index (14) is hovering in overbought territory near 74, pointing to the growing risk of a near-term corrective pullback.
On the downside, initial support is located at the 1.3968 area, with a deeper pullback exposing the 200-day SMA at 1.3816, where dip-buying interest could re-emerge. As long as USD/CAD holds above this moving average, the technical structure favors further gains after any consolidation, though overbought readings warn that fresh bullish follow-through may be increasingly selective at current levels.
(The technical analysis of this story was written with the help of an AI tool.)
USD/CAD daily chart
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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