USD/CAD experiences slight declines, hovering near 1.3730 during the early European session on Thursday. The pair exhibits a slightly positive outlook in the short term as RSI momentum remains above the midpoint. The upside barrier is identified at 1.3750, while the initial support level to monitor stands at 1.3680. The USD/CAD pair is currently trading on a softer note, hovering around 1.3730 in the early European session on Thursday. Rising oil prices, driven by increasing tensions in the Middle East, offer a degree of support to the commodity-linked Loonie in its exchange with the US Dollar.
The Bank of Canada maintained the overnight interest rate at 2.25% on Wednesday. The rate has now held steady for the third consecutive time since its reduction to this level in October 2025. During the conference, BoC Governor Tiff Macklem stated that the conflict in Iran has introduced “a new layer of uncertainty,” indicating that Canada is now experiencing heightened volatility compared to previous conditions. The central bank will currently overlook the immediate inflation driven by oil prices; however, it stands ready to intervene should these costs result in sustained and widespread inflationary pressures. The US Federal Reserve on Wednesday opted to keep its target range for the federal funds rate steady at 3.50-3.75%, aligning with market expectations. Federal Reserve policymakers indicated a quarter of a percentage point rate cut anticipated by year-end, a perspective that appears consistent with their previous projections from December.
In the daily chart, the near-term bias of USD/CAD appears to be shifting towards a mild bullish stance as the price recovers from last week’s lows and moves back toward the upper half of the recent range. However, it continues to trade below the gently descending 100-day EMA near 1.3750, which continues to limit the broader uptrend. The most recent Bollinger structure indicates that the spot is maintaining its position above the middle band at approximately 1.37 and is moving towards the upper band close to 1.38, suggesting a resurgence of upward momentum following a phase of reduced volatility. The RSI has risen to approximately 58 from below 40, indicating a strengthening bullish momentum while still remaining clear of overbought levels.
Initial resistance is positioned at 1.3750, coinciding with the 100-day EMA and the upper Bollinger Band. A daily close above this level would pave the way toward 1.3830 and subsequently 1.3900. On the downside, immediate support is positioned at 1.3680, aligning with the middle Bollinger Band, followed by 1.3640. A breach below this level would reveal the lower band and the recent floor near 1.3580.