USD/CAD eased on Tuesday as a modest rebound in crude Oil lent the Canadian Dollar support, yet buyers kept the broader bullish structure intact. The pair traded near 1.4188, with diverging Fed and Bank of Canada policy paths capping further CAD gains.
USD/CAD edged lower on Tuesday even as the US Dollar held firm, with the Canadian Dollar drawing support from a modest rebound in crude Oil prices after renewed attacks on commercial vessels near the Strait of Hormuz. The pair traded around 1.4188 at the time of writing.
Oil provided the lift. West Texas Intermediate crude traded around $70.30, up nearly 2.50% on the day. Meanwhile, the US Dollar Index was treading water near 101.00.
Diverging monetary policy could limit how far the Canadian Dollar climbs from here. Markets continue to expect the Federal Reserve to raise interest rates later this year to bring inflation back to its 2% target, even as softer-than-expected US labor data have reduced bets on a near-term move. The Bank of Canada, by contrast, is widely expected to hold rates steady for the rest of the year while keeping the door open to cuts if inflation keeps easing.
Technicals still favor the buyers
The daily chart keeps a bullish tilt. USD/CAD holds above the 100-day and 200-day Simple Moving Averages, sitting over prior support at 1.4000 and a nearer floor at 1.4150. Momentum has softened, though, with the RSI easing from overbought territory near 68 and the MACD line slipping modestly below zero.
On the downside, initial support sits at 1.4150. Below the 1.4000 level, the 200-day SMA at 1.3845 and the 100-day SMA at 1.3822 form a deeper demand zone that would likely underpin any sharper pullback, keeping the broader bullish structure intact.
Source: FXStreet
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