A stronger US dollar led to a rebound in the USD/CAD exchange rate.
2026-04-28 15:12:14
The USD/CAD exchange rate fluctuated higher during Tuesday's European trading session, primarily driven by geopolitical tensions and heightened market risk aversion. The recent situation in the Middle East has once again become a focus of market attention, with increased discussions surrounding the passage through the Strait of Hormuz significantly raising uncertainty about the energy supply outlook. As the strait plays a crucial role in global energy transportation, with approximately 20% of global seaborne crude oil shipments relying on it , any potential disruption could quickly impact market pricing mechanisms.
In the United States, President Donald Trump and his national security team are assessing de-escalation proposals from Iran, which involve halting the conflict and restoring passage through key shipping lanes, while postponing some sensitive issues. However, according to the White House, there remains significant uncertainty as to whether these proposals will be accepted, making it difficult for the market to form clear expectations in the short term. Against this backdrop, funds are more inclined to flow into safe-haven assets such as the US dollar, thus exerting temporary downward pressure on the Canadian dollar.
Meanwhile, market attention is gradually shifting to the upcoming Federal Reserve interest rate decision. The market widely expects the Fed to keep interest rates unchanged at this meeting, with the target range expected to remain at 3.50%–3.75% . However, investors are more focused on the policy statement and any hints about the future path of interest rates. A cautious policy stance, or even maintaining higher interest rates for an extended period, would further support the dollar's performance.
From an energy market perspective, the Canadian dollar, as a commodity currency, is highly correlated with crude oil prices. While increased supply uncertainty theoretically supports oil prices, a stronger US dollar, driven by risk aversion, often weakens commodity price performance, indirectly suppressing the Canadian dollar. This interplay between the "safe-haven dollar" and "commodity support" results in a volatile short-term trend for USD/CAD.
From a technical perspective, the daily chart shows that USD/CAD remains in a bearish overall structure, with the exchange rate consistently trading below the 100-day exponential moving average and also constrained by the Bollinger Band's middle line, indicating that the medium-term trend remains downward. The current price is trading in the lower half of the Bollinger Bands, showing that bears still dominate. In terms of momentum indicators, the Relative Strength Index (RSI) is hovering around 36 , below the neutral level of 50, reflecting continued selling pressure in the market, but it has not yet entered extreme oversold territory, meaning that the downside potential has not yet been fully realized.
From a key perspective, resistance is concentrated in the 1.3760–1.3770 range , which coincides with the 100-day moving average and the Bollinger Band middle line, making it technically significant. A rebound to this area is expected to face substantial selling pressure. A break above this level could lead to a test of higher levels around 1.3970. Support lies at 1.3560, corresponding to the lower Bollinger Band. A decisive break below this level could open up further downside potential, continuing the current trend.
The 4-hour chart shows a short-term rebound in the exchange rate, but it remains within a downward channel. Short-term moving averages have flattened slightly, indicating the market is entering a consolidation phase. The RSI is hovering below the neutral zone, suggesting limited upward momentum. If the exchange rate fails to break through the short-term resistance level, it may return to its downward channel.
Editor's Summary:
Overall, USD/CAD is currently in a state of "fundamental uncertainty + bearish technical outlook." The situation in the Middle East and expectations regarding Federal Reserve policy are the dominant short-term factors, driving a temporary strengthening of the US dollar. However, from a trend perspective, the Canadian dollar still has some support. The future trend depends on two key variables: whether the geopolitical situation eases and whether the Federal Reserve sends a stronger signal. If risk aversion subsides and oil prices stabilize, the Canadian dollar is expected to recover its strength; conversely, USD/CAD may continue its upward trend or even experience a temporary reversal.
In the United States, President Donald Trump and his national security team are assessing de-escalation proposals from Iran, which involve halting the conflict and restoring passage through key shipping lanes, while postponing some sensitive issues. However, according to the White House, there remains significant uncertainty as to whether these proposals will be accepted, making it difficult for the market to form clear expectations in the short term. Against this backdrop, funds are more inclined to flow into safe-haven assets such as the US dollar, thus exerting temporary downward pressure on the Canadian dollar.
Meanwhile, market attention is gradually shifting to the upcoming Federal Reserve interest rate decision. The market widely expects the Fed to keep interest rates unchanged at this meeting, with the target range expected to remain at 3.50%–3.75% . However, investors are more focused on the policy statement and any hints about the future path of interest rates. A cautious policy stance, or even maintaining higher interest rates for an extended period, would further support the dollar's performance.
From an energy market perspective, the Canadian dollar, as a commodity currency, is highly correlated with crude oil prices. While increased supply uncertainty theoretically supports oil prices, a stronger US dollar, driven by risk aversion, often weakens commodity price performance, indirectly suppressing the Canadian dollar. This interplay between the "safe-haven dollar" and "commodity support" results in a volatile short-term trend for USD/CAD.
From a technical perspective, the daily chart shows that USD/CAD remains in a bearish overall structure, with the exchange rate consistently trading below the 100-day exponential moving average and also constrained by the Bollinger Band's middle line, indicating that the medium-term trend remains downward. The current price is trading in the lower half of the Bollinger Bands, showing that bears still dominate. In terms of momentum indicators, the Relative Strength Index (RSI) is hovering around 36 , below the neutral level of 50, reflecting continued selling pressure in the market, but it has not yet entered extreme oversold territory, meaning that the downside potential has not yet been fully realized.
From a key perspective, resistance is concentrated in the 1.3760–1.3770 range , which coincides with the 100-day moving average and the Bollinger Band middle line, making it technically significant. A rebound to this area is expected to face substantial selling pressure. A break above this level could lead to a test of higher levels around 1.3970. Support lies at 1.3560, corresponding to the lower Bollinger Band. A decisive break below this level could open up further downside potential, continuing the current trend.
The 4-hour chart shows a short-term rebound in the exchange rate, but it remains within a downward channel. Short-term moving averages have flattened slightly, indicating the market is entering a consolidation phase. The RSI is hovering below the neutral zone, suggesting limited upward momentum. If the exchange rate fails to break through the short-term resistance level, it may return to its downward channel.
Editor's Summary:
Overall, USD/CAD is currently in a state of "fundamental uncertainty + bearish technical outlook." The situation in the Middle East and expectations regarding Federal Reserve policy are the dominant short-term factors, driving a temporary strengthening of the US dollar. However, from a trend perspective, the Canadian dollar still has some support. The future trend depends on two key variables: whether the geopolitical situation eases and whether the Federal Reserve sends a stronger signal. If risk aversion subsides and oil prices stabilize, the Canadian dollar is expected to recover its strength; conversely, USD/CAD may continue its upward trend or even experience a temporary reversal.
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