• USD/CAD wobbles around 1.3670 as upbeat CAD due to rising oil prices has neutralized the positive impact of a firm US Dollar.
• Oil prices have risen sharply due to the war in the Middle East.
• The US Dollar strengthens on a risk-off mood, rising dovish Fed expectations.

The USD/CAD pair trades in a tight range around 1.3670 during the late Asian trading session on Tuesday. The Loonie pair consolidates as the strengthening Canadian Dollar (CAD) due to surging oil prices amid war between the United States (US), Israel, and Iran has offset the firm US Dollar (USD).

The Canadian Dollar reacts positively to soaring energy prices, given that Canada is the largest exporter of oil to the US.

Meanwhile, the US Dollar is broadly outperforming its peers as war in the Middle East has increased its safe-haven demand. During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades firmly near its almost six-week high of around 98.75.

On the domestic front, market speculation for the Federal Reserve (Fed) to leave interest rates unchanged in the June policy meeting has strengthened after the release of the US ISM Manufacturing PMI report for February, which showed a sharp increase in the factor-level inflation.

The CME FedWatch tool shows that the probability of the Fed holding interest rates steady in the June policy meeting has increased to 53.5% from 42.7% seen on Friday.

The data showed on Monday that ISM Manufacturing Prices Paid – which tracks changes in prices paid for inputs such as labor and raw materials – soared to 70.5 against estimates of 59.5 and the previous reading of 59.0.

USD/CAD technical analysis

USD/CAD trades flat at around 1.3670 at the press time. The near-term bias is neutral as spot holds close to the 20-day Exponential Moving Average (EMA), which is flattening near 1.3670.

Price action since mid-February has been range-bound with a sequence of lower daily highs, while the 14-day Relative Strength Index (RSI) has been inside the 40.00-60.00 range, confirming a lack of directional momentum and keeping the pair confined within a consolidative phase rather than a trending environment.

Initial support emerges at the February 18 low of 1.3632, guarding the recent 1.3558–1.3559 area that underpins the February base and defines the lower edge of the current range. A break below this band would expose the 1.3490 low and signal that sellers are regaining control. On the topside, immediate resistance is at the March 2 high of 1.3720, where a daily close above would be needed to shift the bias back toward the upside and open the way toward the mid-1.37s.

(The technical analysis of this story was written with the help of an AI tool.)