Over the past 24 to 48 hours, the USD/CAD exchange rate experienced notable volatility, starting from yesterday’s close at 1.36841 and trending downward overall. The release of Canada’s February Consumer Price Index (CPI) played a key role as the Canadian dollar regained ground, pressuring the US dollar. The stable inflation data led market participants to expect the Bank of Canada to keep interest rates steady, which weighed on USD/CAD.

Additionally, rising oil prices provided a strong boost to the Canadian dollar, reflecting Canada’s status as a major oil exporter. Meanwhile, despite ongoing geopolitical tensions, a pullback in U.S. Treasury yields, especially the 2-year note, limited the US dollar’s upside, with traders taking profits and reducing dollar positions.

For the average investor, this situation is akin to Canada delivering reassuring inflation results, boosting confidence that the central bank will hold rates steady, making the Canadian dollar more appealing. At the same time, surging oil prices acted like extra protection for the loonie, making it harder for the US dollar to advance. This naturally led to a retreat in USD/CAD, signaling renewed market faith in the Canadian dollar.

In summary, the recent price moves in USD/CAD were primarily driven by the stable Canadian CPI, climbing oil prices, and softer US Treasury yields. Moving forward, investors should closely monitor oil market trends and US economic data to anticipate further exchange rate developments.

Daily Chart

The daily chart shows USDCAD slipping from recent highs into a consolidation pattern. Price hovers near the 50-day moving average at 1.3665 but remains below the 200-day average of 1.3827, indicating a cautious medium-term bearish bias. Bollinger Bands contraction points to decreasing volatility, suggesting an imminent breakout. MACD trending lower beneath zero without clear bullish reversal signals confirms sideways to mildly bearish momentum in the broader timeframe.

1H Chart

The hourly chart over the past 3 to 5 days displays a strong rebound off the 1.3525 support level, with short-term moving averages (20 & 50 MA) crossing bullishly. Prices consistently respect the 20 MA as support. Bollinger Bands are expanding upward, reflecting growing volatility. Recent bullish engulfing candlesticks coupled with an emerging MACD crossover signal heightened short-term bullish momentum that could extend the rebound in the near term.

Technical Trend:  USDCAD is currently in a cautious sideways consolidation with a mild bullish tilt in the short term, awaiting clearer directional cues.

Technically, daily MACD remains below zero, and price is capped near 1.3700 resistance. The hourly bullish engulfing pattern and MACD golden cross hint at short-term upward momentum. A decisive break above 1.3700 resistance could open the way towards further upside targets near 1.3750 and 1.3827. However, failure to hold above immediate support at 1.3670 or a breakdown below 1.3525 would signal weakening bullish conviction and potential renewed downside risk.

Today’s economic calendar highlights the U.S. API Crude Oil Stocks report as the most relevant event for USDCAD traders. This inventory data will likely impact crude oil prices significantly, thereby influencing the Canadian dollar’s strength. No major Canadian economic releases are scheduled today. If the API report shows tighter supply, it could boost the loonie and push USDCAD lower; conversely, weaker data may lead to a short-term U.S. dollar bounce.

Resistance & Support

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