The USD/CAD exchange rate rose due to different monetary policies and safe-haven demand, nearing the 50-day Simple Moving Average below the 1.3800 level. The currency pair hit 1.3780 after reaching an intraday high of 1.3803, marking five consecutive days of gains. US airstrikes on Iranian nuclear sites increased tensions in the Middle East, affecting global markets and boosting the US Dollar. Although oil prices rose, risk-sensitive assets grew only slightly, while the US Dollar strengthened against major currencies.

Canadian Retail Sales Impact

Canadian retail sales showed a 1.1% decline in May after a 0.3% rise in April, indicating weaker consumer demand. Worries about Canada’s economic future led to expectations of further interest rate cuts by the Bank of Canada. From a technical standpoint, USD/CAD faces resistance at the 50-day Simple Moving Average near 1.3803. If this level breaks, the next target is 1.3823. Support is at the 20-day SMA around 1.3704, with further support at 1.3640. The Relative Strength Index indicates neutral to slightly bullish momentum in the short term. The USD/CAD pair has moved higher due to diverging interest rates and increased demand for the dollar amid geopolitical uncertainty. As it approached the 50-day Simple Moving Average just below 1.3800, the pair reached a high of 1.3803 before slightly retreating, marking a fifth straight day of gains—indicating strong bullish pressure. The upward trend accelerated due to renewed tensions in the Middle East after US strikes on Iranian nuclear sites. This situation caused uncertainty in broader markets and increased demand for safe-haven assets, benefiting the US Dollar. Although oil prices rose—usually a plus for Canada’s economy—the overall market’s risk aversion meant that rising crude prices did not boost related assets.

Technical Analysis and Support Levels

On the economic front, recent Canadian data added downward pressure. Retail sales in May dropped by 1.1%, wiping out April’s modest 0.3% gain. This suggests Canadian consumers are becoming more cautious, possibly due to high borrowing costs or stagnant wage growth. This data indicates that policymakers in Ottawa are likely to loosen monetary policy rather than tighten it soon. From a technical view, the pair encounters significant resistance at the 50-day simple moving average. A solid push above 1.3803 could lead to a brief rise toward 1.3823. We’ll be watching price movements around these levels—momentum might wane unless new factors emerge. Short-term support is forming at the 20-day SMA around 1.3704. If a pullback occurs, additional support is noted at 1.3640, which has acted as a floor during past declines. Oscillator readings, while not extreme, trend slightly upward, suggesting that resistance may still be tested in the coming days. Market participants should remember that these price shifts are influenced by broader macroeconomic factors: a mix of risk appetite, different interest rate paths, and economic performance across countries shape this pair’s direction. It’s crucial to monitor upcoming economic reports and any policy changes, especially with new inflation data on the horizon, before making additional trades. Timing entries around support levels with a clear directional bias could provide better risk-reward opportunities in the short term. Create your live VT Markets account and start trading now.

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