Oil prices remain high, supporting the strengthening of the Canadian dollar. The USD/CAD is expected to further appreciate.

Tongtong Finance App News—— On Tuesday during the Asian session, USD/CAD rebounded to around 1.3930, after falling in the previous trading day, showing a technical rebound. Overall, the exchange rate is still moving within a range-bound market, with its direction influenced by multiple fundamental factors.

From the macro backdrop, ongoing tension in the Middle East remains an important factor driving the strengthening of the US dollar. Concerning the situation around the Strait of Hormuz, the standoff has not eased. US President Donald Trump said the current ceasefire proposal is “still not enough,” and hinted at taking further action. This uncertainty boosts market risk-off sentiment and increases the appeal of the US dollar, thereby providing upward momentum for the US dollar versus the Canadian dollar.

However, US economic data has been somewhat soft, which partially restrains the dollar. According to data released by the US Institute for Supply Management, the services PMI for March fell to 54.0, below market expectations, indicating that the momentum of economic expansion has slowed to some extent. To a certain degree, this data limits the extent of the dollar’s rise, preventing the exchange rate from achieving a stronger breakout.

Meanwhile, the Canadian dollar is supported by rising oil prices. As a major global energy exporter, Canada’s economy is highly correlated with crude oil prices. Currently, the WTI crude oil price remains at elevated levels, and concerns about supply disruptions are keeping oil prices firm. This provides support for the Canadian dollar, putting downward pressure on USD/CAD.

In addition, signals from Iran that it may intensify attacks on energy infrastructure have warmed market expectations for further tightening of global energy supply. Against this backdrop, the rise in oil prices not only affects the energy market, but also transmits through trade structure to the FX market, making the Canadian dollar relatively firm.

From a technical perspective, on the daily timeframe, USD/CAD is still generally in a choppy upward channel; however, the current price is approaching the area of previous highs and faces some resistance. The key resistance level is at the 1.4000 round-number mark, with further resistance at 1.4050. Support is at 1.3850, and further support at 1.3780. The moving-average system shows the medium-term trend remains bullish, but short-term momentum has weakened somewhat.

On the 4-hour timeframe, the exchange rate is showing a range-bound, oscillating structure, with prices repeatedly moving within the 1.3850 to 1.4000 range. Short-cycle moving averages are flat, and the RSI is in the neutral zone, indicating the market lacks a clear direction. If it breaks above 1.4000, it could open up upside room; if it falls below 1.3850, it may trigger a pullback.

Editor’s Summary:

The current USD/CAD trend shows a typical long-versus-short hedge pattern. On one hand, the Middle East situation boosts risk-off demand and supports a stronger US dollar; on the other hand, rising oil prices lift the Canadian dollar and limit the upside space for the exchange rate. In the short term, in the absence of clear catalysts, USD/CAD is more likely to maintain a range-bound trading pattern. In the future, it will be important to focus on developments in geopolitical conditions and changes in oil prices, as these will be key variables determining the direction of the exchange rate.

(责任编辑：王治强 HF013）

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