The USD/CAD pair gains some positive traction on Friday, snapping a four-day losing streak to the 1.3800 neighborhood or over a two-week low set the previous day. Doubts over the durability of the US-Iran ceasefire support the safe-haven US Dollar (USD) and act as a tailwind for spot prices. However, a modest rise in Crude Oil prices could underpin the commodity-linked Loonie and warrant some caution before positioning for further gains. Traders might also await the latest US consumer inflation figures. Apart from this, Oil price dynamics should provide some meaningful impetus and help in determining the near-term trajectory amid tensions surrounding the Strait of Hormuz.
Iran halted shipping traffic through the strategic waterway in response to brutal Israeli attacks on Lebanon. Meanwhile, US President Donald Trump accused Iran of doing a very poor job of handling oil through the Strait of Hormuz. Trump also warned of renewed strikes if the Iran deal fails, suggesting that escalation risks remain on the table. This remains supportive of elevated Crude Oil prices and continues to fuel inflation fears, which could discourage the US Federal Reserve (Fed) from cutting interest rates for a while. In fact, Minutes from the March 17–18 FOMC meeting revealed that policymakers were in no rush to cut amid upside risks to inflation due to Middle East energy price shocks.
Fed officials, however, signaled the possibility of one rate reduction by the end of this year and another in 2027 if inflation declines, although the timing remains unclear. Hence, the focus will remain glued to the release of the crucial US Consumer Price Index (CPI), which is expected to show that inflation likely rose further in March amid the war-driven surge in Crude Oil prices. This, in turn, will influence market expectations about the Fed’s policy path, which will drive the USD and the USD/CAD pair. Apart from this, traders will take cues from US-Iran peace talks, scheduled in phases between late Friday night and Saturday. This could overshadow Canadian monthly employment details.
Meanwhile, Israeli Prime Minister Benjamin Netanyahu said that he has issued an instruction to start direct negotiations with Lebanon as soon as possible, addressing a key point of contention in the fragile US-Iran ceasefire. A US State Department official reportedly confirmed that talks between Lebanon and Israel will take place next week in Washington, DC. This might keep a lid on further appreciation for the USD and Crude Oil price, warranting some caution before placing aggressive directional bets around the USD/CAD pair.
USD/CAD daily chart
Technical Analysis:
Spot prices showed some resilience below the very important 200-day Simple Moving Average (SMA). Moreover, the pair trades within the upper half of the current Fibonacci retracement range of the March upswing, retaining a constructive near-term tone.
The Relative Strength Index (RSI) around 54 suggests moderate bullish momentum, even as the Moving Average Convergence Divergence (MACD) has slipped marginally below the zero line, hinting at a loss of upside traction rather than a clear bearish reversal.
On the topside, immediate resistance is aligned at the 23.6% Fibo. retracement at 1.3862, with a break there exposing the cycle high anchor near 1.3967. On the downside, initial support is provided by the 200-day SMA at 1.3818, followed by a nearby Fibo. cluster at 1.3797 and 1.3745. A daily close below these retracements would open the way toward deeper supports at 1.3692, 1.3618, and the 1.3523 trough.
(The technical analysis of this story was written with the help of an AI tool.)
