Oil prices fell, and the US dollar remained range-bound against the Canadian dollar, awaiting stabilization.
2026-05-06 10:33:02
The US dollar continued its decline against the Canadian dollar during Wednesday's Asian trading session, falling to around 1.3600, marking its second consecutive day of losses. This pullback was mainly driven by the overall weakening of the US dollar. With the situation in the Middle East showing signs of easing, market risk aversion has cooled, reducing the dollar's attractiveness as a safe-haven asset and thus putting downward pressure on the exchange rate.
U.S. Secretary of State Marco Rubio stated that the relevant military operations have concluded and the established objectives have been achieved. U.S. Defense Secretary Peter Hegseth pointed out that the current ceasefire is not yet fully stable.
Despite sporadic clashes, the market generally interprets this as a de-escalation, which has boosted risk appetite and led to capital outflows from the US dollar. However, the downside potential for the exchange rate has not fully opened up, primarily due to weakened fundamental support for the Canadian dollar.
As a typical commodity currency, the Canadian dollar's performance is highly correlated with oil prices. Recently, oil prices have declined, with WTI crude fluctuating downwards around $100, mainly due to easing supply concerns. The US statement that it will pause some operations to assess the possibility of reaching an agreement with Iran has reduced market expectations of supply disruptions.
The decline in oil prices weakened support for the Canadian dollar, limiting its upward momentum against the US dollar. Therefore, despite the weakening US dollar, the decline in USD/CAD remained relatively limited.
From a macro perspective, the current foreign exchange market is driven by two factors: on the one hand, the US dollar is weakening due to decreased safe-haven demand; on the other hand, the correction in commodity prices is putting pressure on commodity currencies. This divergence has led to a period of consolidation for USD/CAD, rather than a one-sided downward trend.
From a technical perspective, the USD/CAD daily chart shows a downward trend with fluctuations. After breaking below short-term moving average support, the exchange rate has entered a pullback phase. Currently, the price is trading around 1.3600, with resistance levels at 1.3650 and 1.3700, and support levels around 1.3550 and 1.3480. The overall trend is weak, but a accelerated decline has not yet formed. In terms of momentum indicators, the RSI has fallen back to neutral territory, and the MACD has formed a death cross, indicating that short-term downward momentum has strengthened.
On the 4-hour chart, the exchange rate is exhibiting a descending channel pattern, with short-term moving averages diverging downwards, indicating that bears are in control. Multiple rebounds have been met with resistance around 1.3650, suggesting heavy selling pressure above. The MACD remains below the zero line, and the RSI stays around 40, indicating a weak and volatile pattern. A break below the 1.3550 support level could lead to a further decline towards the 1.3480 area; conversely, a rebound above 1.3650 could signal a period of consolidation.
Editor's Summary:
The current USD/CAD exchange rate is influenced by both the US dollar and crude oil prices. A weaker dollar is pushing the exchange rate lower, while falling oil prices are limiting the decline. Geopolitical tensions and energy prices remain key variables dominating short-term movements. If oil prices stabilize and rebound, the Canadian dollar may receive further support; conversely, if the US dollar strengthens again, the exchange rate may rebound. Overall, the market is in a phase of tug-of-war between bulls and bears, and short-term volatility may intensify.
U.S. Secretary of State Marco Rubio stated that the relevant military operations have concluded and the established objectives have been achieved. U.S. Defense Secretary Peter Hegseth pointed out that the current ceasefire is not yet fully stable.
Despite sporadic clashes, the market generally interprets this as a de-escalation, which has boosted risk appetite and led to capital outflows from the US dollar. However, the downside potential for the exchange rate has not fully opened up, primarily due to weakened fundamental support for the Canadian dollar.
As a typical commodity currency, the Canadian dollar's performance is highly correlated with oil prices. Recently, oil prices have declined, with WTI crude fluctuating downwards around $100, mainly due to easing supply concerns. The US statement that it will pause some operations to assess the possibility of reaching an agreement with Iran has reduced market expectations of supply disruptions.
The decline in oil prices weakened support for the Canadian dollar, limiting its upward momentum against the US dollar. Therefore, despite the weakening US dollar, the decline in USD/CAD remained relatively limited.
From a macro perspective, the current foreign exchange market is driven by two factors: on the one hand, the US dollar is weakening due to decreased safe-haven demand; on the other hand, the correction in commodity prices is putting pressure on commodity currencies. This divergence has led to a period of consolidation for USD/CAD, rather than a one-sided downward trend.
From a technical perspective, the USD/CAD daily chart shows a downward trend with fluctuations. After breaking below short-term moving average support, the exchange rate has entered a pullback phase. Currently, the price is trading around 1.3600, with resistance levels at 1.3650 and 1.3700, and support levels around 1.3550 and 1.3480. The overall trend is weak, but a accelerated decline has not yet formed. In terms of momentum indicators, the RSI has fallen back to neutral territory, and the MACD has formed a death cross, indicating that short-term downward momentum has strengthened.
On the 4-hour chart, the exchange rate is exhibiting a descending channel pattern, with short-term moving averages diverging downwards, indicating that bears are in control. Multiple rebounds have been met with resistance around 1.3650, suggesting heavy selling pressure above. The MACD remains below the zero line, and the RSI stays around 40, indicating a weak and volatile pattern. A break below the 1.3550 support level could lead to a further decline towards the 1.3480 area; conversely, a rebound above 1.3650 could signal a period of consolidation.
Editor's Summary:
The current USD/CAD exchange rate is influenced by both the US dollar and crude oil prices. A weaker dollar is pushing the exchange rate lower, while falling oil prices are limiting the decline. Geopolitical tensions and energy prices remain key variables dominating short-term movements. If oil prices stabilize and rebound, the Canadian dollar may receive further support; conversely, if the US dollar strengthens again, the exchange rate may rebound. Overall, the market is in a phase of tug-of-war between bulls and bears, and short-term volatility may intensify.
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