USD/CAD Holds Below 1.3800 as Oil Weakness Supports Dollar

Key Moments

USD/CAD Steadies After Sharp Pullback

The USD/CAD pair found support from dip-buyers during the Asian session on Friday, slowing the prior session’s steep decline from the 1.3870 region, which marked the highest level since April 13. Even so, the recovery lacked conviction, and spot prices continued to trade below the 1.3800 handle, suggesting investors remain cautious about calling for a renewed push in the broader monthly uptrend amid conflicting signals surrounding a potential US-Iran peace arrangement.

Geopolitics and Oil Pressure the Loonie

Axios, citing two US officials, reported that the United States and Iran have reached a draft accord to prolong the current ceasefire for another 60 days. That prospect has kept Crude Oil prices under pressure near the more than one-month low recorded on Thursday. Weaker Oil, in turn, has weighed on the commodity-linked Canadian Dollar and provided a supportive backdrop for the USD/CAD pair.

At the same time, the report indicated that Washington and Tehran continue to diverge on several key issues, including Iran’s nuclear program and security around the Strait of Hormuz. These unresolved points have tempered broader optimism. Alongside that, positioning based on expectations that the US Federal Reserve will raise interest rates by the end of this year has helped revive demand for the US Dollar, adding another layer of support to USD/CAD.

Technical Outlook: Bias Remains Constructive

From a chart perspective, Thursday’s decline pushed USD/CAD below the 23.6% Fibonacci retracement of the latest rally from the monthly low. Despite that setback, momentum indicators continue to signal a positive bias and favor an upside tilt.

The Relative Strength Index (RSI) is hovering close to 57, while the Moving Average Convergence Divergence (MACD) indicator remains in positive territory. Together, these readings suggest that buyers still retain the upper hand as long as spot prices remain above the 38.2% Fibonacci support located around the mid-1.3700s.

If selling pressure deepens, the pair could see additional demand near the 1.3720-1.3700 area. This zone represents a technical confluence that includes the 50% Fibonacci retracement and the 100-day Simple Moving Average (SMA), and may act as an important downside buffer.

Upside Levels to Watch

On the topside, a sustained move back above the 23.6% retracement level at 1.3797 would be an important confirmation that bullish momentum is reasserting itself. Such a break would expose the recent swing high near 1.3872.

Above that, the next hurdle comes in at the 1.3900 round figure, followed by a supply band in the 1.3930-1.3940 region. A decisive move through this zone would likely signal scope for extending the current month-to-date uptrend.

(The technical analysis of this story was written with the help of an AI tool.)

US Dollar Performance Against Major Currencies

The table below shows the percentage change of the US Dollar (USD) versus a basket of major currencies today. According to the data, the US Dollar was the strongest against the Euro.