The USD/CAD pair is approaching 1.3700, and the oversold rebound may continue.
2026-05-11 13:39:36
On Monday during Asian trading hours, the US dollar (USD/CAD) continued its recent rebound, rising back to around 1.3700 . Amid escalating geopolitical risks in the Middle East, safe-haven funds flowed back into US dollar assets, while stronger-than-expected US jobs data further strengthened short-term support for the dollar.
The differences between the United States and Iran over a ceasefire agreement, nuclear programs, and the opening of the Strait of Hormuz remain serious. Previous market optimism regarding a de-escalation of the Middle East situation has cooled rapidly, and global financial markets have reverted to risk-averse trading patterns. Meanwhile, the ongoing tensions in the Strait of Hormuz have significantly increased market concerns about the security of global energy transportation. Some market institutions point out that the escalating tensions in the Middle East are reigniting demand for the US dollar as a safe haven, while simultaneously exacerbating global inflation concerns. As the world's primary reserve currency, the US dollar typically attracts capital inflows during periods of heightened geopolitical risk, which is one of the key reasons for the recent sustained rise of the US dollar against the Canadian dollar.
Furthermore, strong US economic data further reinforced bullish sentiment towards the US dollar. Data released by the US Bureau of Labor Statistics showed that non-farm payrolls increased by 115,000 in April, significantly higher than the market expectation of 62,000; the unemployment rate remained at 4.3% . Following the data release, US Treasury yields rose again, and market expectations for a rapid rate cut by the Federal Reserve cooled significantly. Market analysts believe that although the US job market has slowed somewhat, its overall resilience remains stronger than previously expected, and the Federal Reserve is likely to maintain a hawkish stance in the short term. As a result, the rise in US Treasury yields further enhanced the attractiveness of the US dollar and pushed the USD/CAD exchange rate to remain high.
Meanwhile, the Canadian dollar was weighed down by weak Canadian employment data. Data showed that Canada's unemployment rate rose to 6.9% in April, higher than previous levels, reflecting increasing pressure in the Canadian job market. Some institutions believe that signs of slowing Canadian economic growth are increasing, which may limit the Bank of Canada's room for further policy tightening. However, the Canadian dollar did not show a significant one-sided weakening, mainly due to rising international oil prices. As a typical commodity currency, the Canadian dollar's performance is highly correlated with international crude oil prices. With the deteriorating situation in the Middle East, international crude oil prices have rebounded, providing some support for the Canadian dollar and limiting further upside potential for the USD/CAD exchange rate.
In the short term, if international oil prices continue to rise, the Canadian dollar may receive more support; however, if the demand for the US dollar as a safe haven continues to strengthen, the USD/CAD exchange rate may remain relatively strong.
From the daily chart of USD/CAD, the exchange rate has risen for several consecutive trading days, but has encountered significant resistance near the 100-day moving average , indicating strong technical pressure above. On the daily chart, the exchange rate has regained its footing above the 20-day moving average, suggesting a strengthening short-to-medium-term trend. However, the 1.3720-1.3750 area, where the 100-day moving average is located, remains a key resistance zone. The MACD indicator has now returned to the zero line, with the red bars continuing to expand, indicating increased short-term bullish momentum. The RSI indicator has risen to around 60, suggesting a bullish market sentiment, but it has not yet entered extreme overbought territory. The 1.3650 area currently constitutes the first key support level on the daily chart; a break below this level could lead to a retest of the 1.3600 area. On the upside, if the exchange rate effectively breaks through the 100-day moving average, a further test of the 1.3800 area cannot be ruled out.
Editor's Summary : The USD/CAD market is currently in a complex tug-of-war between the "dollar as a safe haven" logic and "oil price support for the Canadian dollar." Escalating tensions in the Middle East are driving safe-haven buying of the dollar, while strong US employment data further strengthens the dollar's interest rate advantage. However, the continued rise in international oil prices provides significant support for the commodity currency Canadian dollar, and the USD/CAD pair is encountering significant resistance near its 100-day moving average, limiting further substantial gains. The market will need to focus on three key areas going forward: first, the situation in the Middle East and developments in the Strait of Hormuz; second, changes in the Federal Reserve's interest rate expectations; and third, international oil price trends and Canadian economic data. Overall, the USD/CAD pair may maintain high-level fluctuations in the short term, and its future direction will still depend on the balance between dollar safe-haven demand and oil price volatility.
The differences between the United States and Iran over a ceasefire agreement, nuclear programs, and the opening of the Strait of Hormuz remain serious. Previous market optimism regarding a de-escalation of the Middle East situation has cooled rapidly, and global financial markets have reverted to risk-averse trading patterns. Meanwhile, the ongoing tensions in the Strait of Hormuz have significantly increased market concerns about the security of global energy transportation. Some market institutions point out that the escalating tensions in the Middle East are reigniting demand for the US dollar as a safe haven, while simultaneously exacerbating global inflation concerns. As the world's primary reserve currency, the US dollar typically attracts capital inflows during periods of heightened geopolitical risk, which is one of the key reasons for the recent sustained rise of the US dollar against the Canadian dollar.
Furthermore, strong US economic data further reinforced bullish sentiment towards the US dollar. Data released by the US Bureau of Labor Statistics showed that non-farm payrolls increased by 115,000 in April, significantly higher than the market expectation of 62,000; the unemployment rate remained at 4.3% . Following the data release, US Treasury yields rose again, and market expectations for a rapid rate cut by the Federal Reserve cooled significantly. Market analysts believe that although the US job market has slowed somewhat, its overall resilience remains stronger than previously expected, and the Federal Reserve is likely to maintain a hawkish stance in the short term. As a result, the rise in US Treasury yields further enhanced the attractiveness of the US dollar and pushed the USD/CAD exchange rate to remain high.
Meanwhile, the Canadian dollar was weighed down by weak Canadian employment data. Data showed that Canada's unemployment rate rose to 6.9% in April, higher than previous levels, reflecting increasing pressure in the Canadian job market. Some institutions believe that signs of slowing Canadian economic growth are increasing, which may limit the Bank of Canada's room for further policy tightening. However, the Canadian dollar did not show a significant one-sided weakening, mainly due to rising international oil prices. As a typical commodity currency, the Canadian dollar's performance is highly correlated with international crude oil prices. With the deteriorating situation in the Middle East, international crude oil prices have rebounded, providing some support for the Canadian dollar and limiting further upside potential for the USD/CAD exchange rate.
In the short term, if international oil prices continue to rise, the Canadian dollar may receive more support; however, if the demand for the US dollar as a safe haven continues to strengthen, the USD/CAD exchange rate may remain relatively strong.
From the daily chart of USD/CAD, the exchange rate has risen for several consecutive trading days, but has encountered significant resistance near the 100-day moving average , indicating strong technical pressure above. On the daily chart, the exchange rate has regained its footing above the 20-day moving average, suggesting a strengthening short-to-medium-term trend. However, the 1.3720-1.3750 area, where the 100-day moving average is located, remains a key resistance zone. The MACD indicator has now returned to the zero line, with the red bars continuing to expand, indicating increased short-term bullish momentum. The RSI indicator has risen to around 60, suggesting a bullish market sentiment, but it has not yet entered extreme overbought territory. The 1.3650 area currently constitutes the first key support level on the daily chart; a break below this level could lead to a retest of the 1.3600 area. On the upside, if the exchange rate effectively breaks through the 100-day moving average, a further test of the 1.3800 area cannot be ruled out.
Editor's Summary : The USD/CAD market is currently in a complex tug-of-war between the "dollar as a safe haven" logic and "oil price support for the Canadian dollar." Escalating tensions in the Middle East are driving safe-haven buying of the dollar, while strong US employment data further strengthens the dollar's interest rate advantage. However, the continued rise in international oil prices provides significant support for the commodity currency Canadian dollar, and the USD/CAD pair is encountering significant resistance near its 100-day moving average, limiting further substantial gains. The market will need to focus on three key areas going forward: first, the situation in the Middle East and developments in the Strait of Hormuz; second, changes in the Federal Reserve's interest rate expectations; and third, international oil price trends and Canadian economic data. Overall, the USD/CAD pair may maintain high-level fluctuations in the short term, and its future direction will still depend on the balance between dollar safe-haven demand and oil price volatility.
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