USD/CAD Price Forecast: More downside likely towards 1.3970

USD/CAD edges lower to near 1.4033 amid strength in the Canadian Dollar.
The Red Sea closure could lift oil prices further.
BoC’s Macklem keeps the door open for further interest rate hikes.

Sagar Dua FXStreet

The USD/CAD pair trades marginally lower at around 1.4033 during the European trading session on Friday. The Loonie pair edges down as the Canadian Dollar (CAD) outperforms its major currency peers amid fears that oil prices could accelerate further.

Currencies from economies, such as Canada, that are net energy exporters tend to outperform in a high-oil-price environment.

The oil price outlook has improved amid threats from Iran that it will close the Red Sea if the United States (US) strikes on Iranian infrastructure.

On the monetary policy front, Bank of Canada (BoC) Governor Tiff Macklem said in the press conference, after leaving interest rates unchanged at 2.25%, that the central bank might need to raise interest rates if oil prices remain higher.

Meanwhile, the US Dollar holds Thursday’s recovery move amid fears of a resurgence in US inflation due to rising energy prices.

USD/CAD technical analysis

USD/CAD trades slightly lower at around 1.4033, extending a corrective tone after pulling back from recent highs. The pair now sits beneath the 20-day Exponential Moving Average (EMA) at 1.4107, suggesting a near-term bearish bias as price loses traction relative to the short-term trend benchmark.

The Relative Strength Index (RSI) at 39.6 has retreated from overbought territory and now leans toward the lower half of its range, suggesting that downside momentum is still in play but not yet oversold.

On the topside, immediate resistance is defined by the 20-day EMA at 1.4107, and a sustained recovery above this barrier would be needed to ease the current pressure. On the downside, the pair is expected to extend its decline towards the March 31 high at 1.3967.

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

Economic Indicator

BoC Interest Rate Decision

The Bank of Canada (BoC) announces its interest rate decision at the end of its eight scheduled meetings per year. If the BoC believes inflation will be above target (hawkish), it will raise interest rates in order to bring it down. This is bullish for the CAD since higher interest rates attract greater inflows of foreign capital. Likewise, if the BoC sees inflation falling below target (dovish) it will lower interest rates in order to give the Canadian economy a boost in the hope inflation will rise back up. This is bearish for CAD since it detracts from foreign capital flowing into the country.

GBP/USD picks up pace around 1.3550

GBP/USD leaves behind part of the recent three-day retracement and hovers around the 1.3550 region on Monday. The Greenback’s fresh downward trend helps Cable recoup part of the recent ground lost while attention remains on the potential Fed rate path.

EUR/USD challenges 1.1600 amid a decent recovery

EUR/USD is partially trimming Friday’s severe pulback and is managing to flirt with the key 1.1600 barrier at the beginning of the week. The pair’s rebound follows a modest selling pressure on the US Dollar as investors assess the likelihood of a Fed rate hike in September.

Gold slips back to $4,400, multi-day lows

Gold adds to Friday’s maked decline, briefly falling to the sub-$4,400 region per troy ounce on Monday. The yellow metal’s pullback comes despite the softer stance in the US Dollar and steady uncertainty in the Middle East, although rising yields keep bulls at bay for now.

Crypto Today: Bitcoin, Ethereum, XRP broadly consolidate amid renewed US-Iran strikes

Bitcoin remains resilient above $78,000 as investors anticipate a renewed push toward $80,000. Ethereum continues to demonstrate a constructive technical setup, holding above $2,400. Ripple is exhibiting early signs of recovery near $1.37.

Oil rallies on fresh persian gulf strikes

Energy prices are trading firmer this morning after the US carried out targeted strikes against Iran, drawing retaliatory strikes and reinforcing concerns about a prolonged stalemate in the Persian Gulf. Oil prices started the week stronger following the first military strikes between the US and Iran in a month. ICE Brent briefly moved back above US$90/bbl in early morning Asia trading.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.