USD/CAD Price Forecast: Surging oil prices lift Canadian Dollar

The Canadian Dollar (CAD) trades higher against the US Dollar (USD) on Tuesday. The USD/CAD pair is down 0.25% to near 1.3780 at the time of writing as the Loonie outperforms due to surging oil prices.

Also as of writing, the WTI Oil price is up around 0.8% to near $91.50. The oil price is close to its over a month high of $92.25, a level that was previously touched also in June 8.

Oil prices have rallied further amid fears of a prolonged energy supply disruption in the wake of the Strait of Hormuz closure.

Higher energy prices bode well for currencies from economies such as Canada, which are net energy exporters.

Meanwhile, the US Dollar is under pressure as investors turn cautious ahead of the United States (US) Producer Price Index (PPI) and the Consumer Price Index (CPI) data for August, which are scheduled for release on Thursday and Friday, respectively.

At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.11% lower to near 98.80.

USD/CAD Technical Analysis

On the daily chart, USD/CAD trades at 1.3783, keeping a bearish near-term tone as it holds beneath the 20-day Exponential Moving Average (EMA) at 1.3865 and the 61.8% Fibonacci retracement at 1.3817, which is plotted from the May low of 1.3550 to the June high at 1.4248.

The Relative Strength Index (RSI) at about 39 remains below the midline, hinting at persistent downside pressure rather than an oversold extreme, which suggests rallies may continue to be sold while price stays capped under the nearby EMA and retracement barriers.

On the topside, immediate resistance is seen at the 20-day EMA around 1.3865, followed by the 50.0% Fibonacci retracement at 1.3901 and then the 38.2% retracement near 1.3983, with the 23.6% level at 1.4085 acting as a more distant cap if a stronger rebound unfolds. On the downside, initial support emerges at the 78.6% Fibonacci retracement around 1.3701, with a deeper floor located at the 100.0% retracement near 1.3551, where bears would likely reassess the strength of the broader decline.