Falling oil prices weakened support for the Canadian dollar, with the USD/CAD pair rising for the fourth consecutive day and approaching the 1.4000 level.
2026-06-16 11:30:22
The US dollar/Canadian dollar pair maintained its upward momentum during Tuesday's Asian trading session, trading around 1.3990, marking its fourth consecutive day of gains. Despite improved market risk sentiment following the US-Iran memorandum of understanding to end the conflict, global shipping companies remained cautious about rerouting routes through the Strait of Hormuz, as the formal text of the agreement had not yet been released, creating uncertainty about the speed of recovery in Middle Eastern energy supplies.
US President Trump announced the signing of a memorandum of understanding with Iran, aiming to gradually restore navigation in the Strait of Hormuz, which had been affected by the agreement. According to semi-official Iranian media reports, the current draft agreement indicates that the waterway is expected to gradually resume normal operation within the next 30 days, according to Iran's arrangements. However, with market expectations of a gradual increase in future crude oil supply, international oil prices have come under pressure and fallen, putting significant pressure on the Canadian dollar as a commodity currency and pushing the US dollar to continue rising against the Canadian dollar.
The escalation of tensions in the Middle East had previously raised market concerns that a sharp rise in energy prices could drive up global inflation and force major central banks to adopt a more hawkish policy stance. However, with the decline in oil prices, the risk of energy-driven inflation has eased, and the fall in global bond yields has reduced market concerns about the Bank of Canada maintaining high borrowing costs. Overall, oil price fluctuations remain a significant factor influencing the Canadian dollar's short-term performance.
Meanwhile, market focus is gradually shifting to the Federal Reserve's upcoming monetary policy decision. The market widely expects the Fed to keep the federal funds rate unchanged at 3.50% to 3.75%, and investors will be closely watching the press conference delivered by new Chairman Kevin Warsh for further clues about the future path of interest rates, economic growth, and the inflation outlook. If the Fed continues to signal a cautious policy stance, the dollar may receive further support, potentially pushing the USD/CAD pair to higher levels.
From a daily chart perspective, the USD/CAD pair has risen for several consecutive trading days, indicating strengthening short-term bullish momentum, with the exchange rate approaching the key psychological level of 1.4000 again. A decisive break above this level would open up further upside potential, with resistance levels at 1.4050 and 1.4100. On the downside, short-term support is around 1.3920; a break below this level could lead to a pullback to the 1.3850 and 1.3800 areas. Overall, the daily chart structure is gradually turning bullish, but attention should be paid to whether profit-taking pressure emerges around 1.4000.
From a 4-hour chart perspective, USD/CAD maintains an upward trend with short-term moving averages aligned upwards, indicating that buyers still hold a certain advantage. However, technical indicators are approaching high levels, suggesting a short-term need for correction. If the exchange rate can firmly hold above 1.4000, bulls may further test the resistance near 1.4050; conversely, if it repeatedly fails to break through psychological levels, a pullback and retest of the 1.3920 support level is possible.
Editor's Summary : The recent rise in the USD/CAD exchange rate has been primarily driven by a decline in international oil prices and a weakening of the Canadian dollar's safe-haven appeal. Progress on the US-Iran peace agreement will continue to determine the future direction of the energy market. Meanwhile, the Federal Reserve's interest rate decision and policy statements from new Chairman Kevin Warsh will be crucial indicators of the short-term direction of the US dollar. In the short term, as long as oil prices remain weak and the US dollar remains stable, USD/CAD still has a chance to challenge the area above 1.4000, but attention should be paid to the support that geopolitical developments and a rebound in energy prices may provide to the Canadian dollar.
US President Trump announced the signing of a memorandum of understanding with Iran, aiming to gradually restore navigation in the Strait of Hormuz, which had been affected by the agreement. According to semi-official Iranian media reports, the current draft agreement indicates that the waterway is expected to gradually resume normal operation within the next 30 days, according to Iran's arrangements. However, with market expectations of a gradual increase in future crude oil supply, international oil prices have come under pressure and fallen, putting significant pressure on the Canadian dollar as a commodity currency and pushing the US dollar to continue rising against the Canadian dollar.
The escalation of tensions in the Middle East had previously raised market concerns that a sharp rise in energy prices could drive up global inflation and force major central banks to adopt a more hawkish policy stance. However, with the decline in oil prices, the risk of energy-driven inflation has eased, and the fall in global bond yields has reduced market concerns about the Bank of Canada maintaining high borrowing costs. Overall, oil price fluctuations remain a significant factor influencing the Canadian dollar's short-term performance.
Meanwhile, market focus is gradually shifting to the Federal Reserve's upcoming monetary policy decision. The market widely expects the Fed to keep the federal funds rate unchanged at 3.50% to 3.75%, and investors will be closely watching the press conference delivered by new Chairman Kevin Warsh for further clues about the future path of interest rates, economic growth, and the inflation outlook. If the Fed continues to signal a cautious policy stance, the dollar may receive further support, potentially pushing the USD/CAD pair to higher levels.
From a daily chart perspective, the USD/CAD pair has risen for several consecutive trading days, indicating strengthening short-term bullish momentum, with the exchange rate approaching the key psychological level of 1.4000 again. A decisive break above this level would open up further upside potential, with resistance levels at 1.4050 and 1.4100. On the downside, short-term support is around 1.3920; a break below this level could lead to a pullback to the 1.3850 and 1.3800 areas. Overall, the daily chart structure is gradually turning bullish, but attention should be paid to whether profit-taking pressure emerges around 1.4000.
From a 4-hour chart perspective, USD/CAD maintains an upward trend with short-term moving averages aligned upwards, indicating that buyers still hold a certain advantage. However, technical indicators are approaching high levels, suggesting a short-term need for correction. If the exchange rate can firmly hold above 1.4000, bulls may further test the resistance near 1.4050; conversely, if it repeatedly fails to break through psychological levels, a pullback and retest of the 1.3920 support level is possible.
Editor's Summary : The recent rise in the USD/CAD exchange rate has been primarily driven by a decline in international oil prices and a weakening of the Canadian dollar's safe-haven appeal. Progress on the US-Iran peace agreement will continue to determine the future direction of the energy market. Meanwhile, the Federal Reserve's interest rate decision and policy statements from new Chairman Kevin Warsh will be crucial indicators of the short-term direction of the US dollar. In the short term, as long as oil prices remain weak and the US dollar remains stable, USD/CAD still has a chance to challenge the area above 1.4000, but attention should be paid to the support that geopolitical developments and a rebound in energy prices may provide to the Canadian dollar.
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