USD/CAD Price Forecast: Surging Oil prices back further downside

USD/CAD declines to near 1.4120 as the Canadian Dollar trades higher.
Surging Oil prices strengthen currencies from economies that are net energy exporters.
Investors await the US CPI data due later in the day and Wednesday's BoC monetary policy announcement.

Sagar Dua FXStreet

The Canadian Dollar (CAD) trades higher against its major currency peers, except antipodeans, during the European trading session on Tuesday. The USD/CAD pair declines 0.25% to near 1.4120 at the time of writing as the Loonie gains amid improvement in the appeal of currencies from economies, such as Canada, which are net Oil exporters.

The United States (US) economy is also a net energy exporter, but the US Dollar faces selling pressure ahead of the Consumer Price Index (CPI) data for June release at 12:30 GMT.

At press time, the WTI Oil price trades 2.73% higher to near $80.00, the highest level seen in almost a month. Oil prices have increased significantly as US President Donald Trump claims that Washington is the rightful recipient of toll fees near the Strait of Hormuz.

On the domestic front, investors await the Bank of Canada’s (BoC) monetary policy announcement due on Wednesday, in which it is expected to leave interest rates unchanged at 2.25%. Investors will pay attention to comments regarding the outlook on inflation and the economy.

Meanwhile, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.1% lower to near 101.18.

USD/CAD technical analysis

Bias: USD/CAD trades lower at around 1.4120, retaining a mildly bearish near-term bias as it remains capped by the 20-day exponential moving average (EMA) at 1.4136.

Momentum: Price action sits just under this dynamic resistance, hinting at a consolidation phase after the recent pullback, while the Relative Strength Index (RSI) around 52 on the daily chart suggests neutral momentum rather than strong directional conviction.

Resistance: On the topside, immediate resistance is located at the 20-day EMA at 1.4136, and a daily close above this barrier would ease current downside pressure and open the way for a more constructive recovery. Looking up, the major barrier would be the yearly high at around 1.4248.

Support: On the downside, the pair could extend its decline towards the June 18 low at 1.4095; below that, the downside momentum could accelerate, and the pair could fall towards the psychological level of 1.4000.

(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.

AUD/USD remains below 0.7000 amid light trading

AUD/USD fills a modest bearish gap on Monday, but remains below 0.7000 in the Asian session amid holiday-thinned liquidity. The US Dollar attempts a bounce even as US bond yields pull back from multi-year highs, limiting the pair. Moreover, diminishing odds of another RBA rate hike in November cap the Aussie.

USD/JPY hovers above 158.00 amid Japan/ US holiday

USD/JPY extends its range-bound price action into a new week, trading above 158.00 as bulls remain on high alert amid speculation that authorities will step in to prop up the Japanese Yen. Meanwhile, softer US bond yields keep US Dollar bulls on the back foot and cap the pair's upside. However, geopolitical uncertainties could limit losses for the safe-haven buck amid thin liquidity due to a holiday in Japan and the US.

Gold sticks to modest losses; seems vulnerable below $4,200 on Fed hike bets

Gold extends its intraday retracement slide from a one-week high, hitting a fresh daily low around $4,170 during the early European session. The US Dollar attracts fresh buyers after a modest downtick amid the US Federal Reserve's hawkish outlook, which, in turn, is seen as weighing on the non-yielding bullion.

Bitcoin struggles as ETF outflows, geopolitical uncertainty weigh

Bitcoin hovers around $83,600 on Monday after a 3.1% correction last week. US-listed spot ETFs recorded an outflow of $681.10 million last week, snapping the three-week inflow streak. Geopolitical uncertainty and mixed signals keep investors cautious.

The week ahead: A critical week as earnings and CPI test market

The Oil price is relatively stable this morning, and US and European stock markets are poised to open higher, as risk sentiment shrugs off an escalation in the Middle East and concerns about rising bond yields.

Has Bitcoin really escaped the macro forces it was built to fight?

Over 17 years ago, Satoshi Nakamoto designed Bitcoin (BTC) on the back of a global financial crisis as an alternative to the global monetary system outside the control of central banks, governments and traditional intermediaries. This raises a key question: has Bitcoin really become independent of the macroeconomic forces it was built to challenge?