Canadian Dollar falls despite increased Oil prices

USD/CAD rises amid hot US CPI and PPI data.
Persistent inflation pressure reinforces expectations that the Federal Reserve may keep interest rates higher for longer.
Ongoing Iran-related geopolitical tensions and mixed Canadian housing and manufacturing data keep the Canadian Dollar under pressure.

Agustin Wazne FXStreet

The USD/CAD pair elevated near the 1.3760 level on Friday and remains supported by persistent inflation concerns and rising US Treasury yields following this week’s hotter-than-expected US inflation data.

The latest US Consumer Price Index (CPI) report showed headline inflation accelerating to 3.8% YoY in April, while Producer Price Index (PPI) data released later in the week surged 1.4% MoM, marking the strongest monthly increase in four years. This data reinforced expectations that the Federal Reserve (Fed) may keep interest rates elevated for longer as inflationary pressures continue to broaden across the economy.

Additional support for the Greenback comes from ongoing geopolitical uncertainty in the Middle East. Markets remain cautious as negotiations involving Iran continue to show little meaningful progress, keeping fears alive that disruptions around the Strait of Hormuz could persist. Meanwhile, elevated Oil prices continue limiting broader downside pressure on the commodity-linked Canadian Dollar (CAD).

On the Canadian side, traders assessed fresh domestic economic data published on Friday. Canadian housing-related indicators rose to 279.3K, higher than the 240K expected, while Manufacturing Sata released at 3% MoM, lower than the 3.5% expected, highlighting mixed momentum across the industrial sector despite some improvement in factory activity earlier in the quarter.

Short-term technical analysis:

On the 4-hour chart, USD/CAD trades at 1.3756, keeping a bullish near-term bias as it holds above the 20-period Simple Moving Average (SMA) at 1.3717 and the 100-period SMA at 1.3659. The pair is testing a nearby horizontal pivot at 1.3756 while the Relative Strength Index (RSI) hovers in overbought territory near 78, hinting that upside momentum remains strong but could be prone to consolidation due to the overbought nature of the RSI.

On the topside, immediate resistance is located at the horizontal barrier around 1.3767, and a sustained break higher would open the way for further gains. On the downside, initial support is seen at 1.3751, followed by 1.3735, with the 20-period SMA at 1.3717 and the 100-period SMA at 1.3659 providing deeper structural demand on pullbacks.

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

Author

Agustin Wazne

FXStreet

Agustin Wazne joined FXStreet as a Junior News Editor, focusing on Commodities and covering Majors.

GBP/USD clings to daily gains near 1.3350

GBP/USD holds just in positive territory around 1.3350 on Friday as the Greenback keeps a vacillating price action. With Fed rate hike expectations easing and US markets closed for the Independence Day holiday, Cable remains on track to post solid weekly gains.

EUR/USD remains sidelined around 1.1440

EUR/USD holds on to its recent gains and consolidates around 1.1440 at the end of the week as the US Dollar lacks clear direction. In the meantime, trading conditions remain subdued, with volatility constrained by the closure of US markets for the Independence Day holiday.

Gold flirts with two-week highs, targets $4,200

Gold extends its recovery for a third straight day, advancing toward the $4,200 mark per troy ounce on Friday. The precious metal looks set to snap a four-week losing streak as softer-than-expected June US NFP data prompt investors to scale back expectations of further Fed tightening.

Crypto Today: Bitcoin, Ethereum, XRP advance amid renewed capital inflows

Bitcoin maintains its upward momentum, holding above the $61,000 mark at the time of writing on Friday. Major altcoins such as Ethereum and Ripple are also posting gains, signaling a modest uptick in market sentiment and renewed risk appetite among investors.

The Iran war failed to trigger a recession. Can the US economy keep defying expectations?

Nearly four months after the start of the Iran war, the US economy remains remarkably resilient. While the conflict initially triggered a severe disruption to global energy markets and a sharp rise in Oil prices, recent diplomatic progress between Washington and Tehran has eased concerns about a prolonged supply shock.

Kevin Warsh offers no policy clues: Why markets still got their answer

Financial markets came to Sintra looking for clues about the Federal Reserve's (Fed) next move. They largely left with confirmation that Fed Chair Kevin Warsh intends to make those clues much harder to find.