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USD/CAD Price Trades below 1.3800 with bullish bias on weak Oil, USD uptick

  • USD/CAD stalls the previous day’s sharp retracement slide from its highest level since April 13.
  • Weaker Oil prices undermine the Loonie and support spot prices amid a modest USD uptick.
  • The technical setup favors bulls, warranting some caution before positioning for further losses.

The USD/CAD pair attracts some dip-buyers during the Asian session on Friday, stalling the previous day’s sharp retracement slide from the 1.3870 region, or the highest level since April 13. Spot prices, however, lack follow-through and remain below the 1.3800 mark, warranting caution before positioning for the resumption of the monthly uptrend amid mixed signals over a potential US-Iran peace deal.

Axios, citing two US officials, reported that the US and Iran have reached a draft agreement to extend the ongoing ceasefire for 60 days. The optimism, in turn, keeps Crude Oil prices depressed close to an over a one-month low touched on Thursday, which is seen undermining the commodity-linked Loonie and acting as a tailwind for the USD/CAD pair. Meanwhile, the US and Iran remain at odds over key issues, including Tehran’s nuclear program and the Strait of Hormuz. This keeps the enthusiasm under check, which, along with bets that the US Federal Reserve (Fed) will hike rates by the end of this year, helps revive the US Dollar (USD) demand and further supports spot prices.

From a technical perspective, the overnight downfall dragged the USD/CAD pair below the 23.6% Fibonacci retracement level of the recent upswing from the monthly low. However, momentum indicators are holding a constructive bullish bias and back the topside tilt. Furthermore, the Relative Strength Index (RSI) is hovering near 57, and Moving Average Convergence Divergence (MACD) is in positive territory, hinting that buyers still retain control while spot prices stay above the 38.2% Fibo. support near mid-1.3700s. If a deeper pullback unfolds, spot prices could find decent support around 1.3720-1.3700 confluence – comprising the 50% Fibo. and the 100-day Simple Moving Average (SMA).

On the topside, momentum back above the 23.6% retracement at 1.3797 would open the door toward the overnight swing high, near 1.3872. This is followed by the 1.3900 round figure and the 1.3930-1.3940 supply zone, which, if cleared decisively, should pave the way for an extension of the month-to-date uptrend.

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

USD/CAD daily chart

Chart Analysis USD/CAD

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Euro.

USDEURGBPJPYCADAUDNZDCHF
USD0.11%0.06%0.05%0.03%0.02%-0.40%0.03%
EUR-0.11%-0.05%-0.04%-0.07%-0.07%-0.47%-0.08%
GBP-0.06%0.05%0.00%-0.04%-0.03%-0.43%-0.02%
JPY-0.05%0.04%0.00%-0.01%-0.03%-0.46%-0.03%
CAD-0.03%0.07%0.04%0.00%-0.02%-0.42%-0.00%
AUD-0.02%0.07%0.03%0.03%0.02%-0.40%0.01%
NZD0.40%0.47%0.43%0.46%0.42%0.40%0.42%
CHF-0.03%0.08%0.02%0.03%0.00%-0.01%-0.42%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

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Australian Dollar weakens as hawkish RBNZ lifts New Zealand Dollar

  • AUD/NZD falls as hawkish RBNZ policy outlooks boosted the New Zealand Dollar.
  • RBNZ’s Breman stated that rates are likely to increase sooner and by more than previously signaled to combat persistent inflation.
  • Australian Dollar falls as markets slashed expectations for further RBA interest rate hikes.

AUD/NZD depreciates for the third successive day, trading around 1.2020 during the Asian hours on Friday. The currency cross loses ground as the New Zealand Dollar (NZD) finds strong support amid growing hawkish sentiment surrounding the Reserve Bank of New Zealand’s (RBNZ) policy outlook.

According to Reuters, RBNZ Governor Anna Breman stated on Friday that interest rates are likely to increase sooner and by more than previously signaled to combat persistent inflation. While the central bank decided to keep the Official Cash Rate (OCR) on hold at 2.25% during its May meeting on Wednesday, the decision revealed a deeply divided board, with three members voting for an immediate quarter-point hike and three voting to maintain the status quo.

Further reinforcing the New Zealand Dollar’s strength is an uptick in domestic confidence data. The ANZ-Roy Morgan Consumer Confidence Index rebounded to 86.5 in May, climbing from April’s reading of 80.3, which had marked its lowest level since May 2023. Although the index has managed to recover 6 points over the past month, it still remains notably down by 21 points from its peak in January, suggesting that while local consumer sentiment is recovering, it is doing so from a deeply depressed baseline.

In contrast, the Australian Dollar (AUD) is struggling against the New Zealand Dollar as markets sharply scale back expectations for further interest rate hikes by the Reserve Bank of Australia (RBA).

Investors are reacting to a series of economic indicators suggesting that earlier RBA monetary tightening is successfully filtering through the Australian economy. A softer-than-expected April inflation print, combined with weak consumer spending data and recent signs of a cooling labor market, has prompted market participants to aggressively cut the odds of a June rate hike, dragging the Australian Dollar lower.

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Swiss Franc declines as market caution lifts USD

  • USD/CHF appreciates as the US Dollar gains on geopolitical Middle East risks.
  • MUFG Bank warns the US Dollar could appreciate if Washington and Tehran fail to finalize a ceasefire extension.
  • The Swiss Franc could receive support from a resilient domestic economy.

USD/CHF edges higher after registering modest losses in the previous day, trading around 0.7840 during the Asian hours on Friday. The pair caught in a tug-of-war between lingering geopolitical risks in the Middle East and stronger-than-expected economic data from Switzerland.

Analysts at MUFG Bank have warned that the US Dollar (USD) could appreciate if Washington and Tehran fail to finalize a ceasefire extension. An unresolved conflict threatens to build global inflationary pressures, a scenario that could push US Treasury yields higher and shift the Federal Reserve’s (Fed) internal consensus toward a more hawkish monetary policy stance to combat rising prices.

While the United States (US) and Iran have tentatively agreed to a 60-day ceasefire extension, the market’s initial relief remains capped. The potential breakthrough promises to allow unrestricted shipping through the critical Strait of Hormuz, with Iran reportedly committing to clear all maritime mines from the waterway within 30 days.

However, traders are maintaining a cautious stance following a CNN report that US President Donald Trump has yet to approve the final terms. Further dampening immediate optimism, Vice President JD Vance noted that Washington was “not there yet” on a final deal, despite being close, while firmly reminding markets that the US remains positioned to substantially set back Tehran’s nuclear program if necessary.

However, the Swiss Franc (CHF) found support from a resilient domestic economy, preventing a runaway rally for the USD/CHF pair. Switzerland’s non-farm payrolls accelerated in the first quarter of 2026, rising 0.5% year-on-year to 5.537 million, up from a 0.2% gain in the previous quarter. This labor market growth was primarily driven by the services sector, which expanded by 0.6% to 4.409 million due to strong administrative and support activity. Additionally, the industrial sector showed signs of stabilization, recovering by 0.1% to 1.129 million after contracting by the same margin in the final quarter of last year.

Further underpinning the Swiss economic outlook is a notable recovery in investor confidence. The latest UBS & CFA Society Switzerland survey revealed that Swiss investor sentiment improved significantly to -11.1 in May 2026, up from the dismal -30.3 recorded in May 2025. Although the index technically remains in negative territory, the sharp rise reflects a much less pessimistic outlook among financial professionals. This stabilizing view is reinforced by the fact that approximately 75% of surveyed analysts now expect economic conditions in Switzerland to remain unchanged over the next six months, suggesting a baseline of steady, if quiet, resilience.

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USD/JPY Price Sees more upside towards 160.70

  • USD/JPY edges up to near 159.32 as the Japanese Yen trades with caution.
  • Tokyo CPI ex. Fresh Food grew at a moderate pace of 1.3% YoY in May.
  • Japan’s FM Katayama warned that authorities could intervene in the forex market to counter excessive volatility.

The USD/JPY pair trades marginally higher to near 159.32 during the Asian trading session on Friday. The pair edges up as the Japanese Yen (JPY) trades cautiously, following the release of the Tokyo Consumer Price Index (CPI) data for May and verbal intervention warning from Japan’s Finance Minister (FM) Satsuki Katayama.

Tokyo’s CPI ex. Fresh Food, which is closely tracked by Bank of Japan (BoJ) officials, arrived lower at 1.3% Year-on-Year (YoY), lower than estimates and the previous reading of 1.5%. The CPI data ex. Fresh Food stayed below the BoJ’s 2% target for a fourth straight month as fuel and education subsidies offset rising raw material costs from the U.S.-Israeli war on Iran, Reuters reports.

Meanwhile, Japan’s FM Katayama warned that authorities could intervene in the foreign exchange (Forex) market to counter excessive volatility against the Japanese Yen.

As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades slightly higher to near 99.00, but is close to Thursday’s low, which is 98.95.

On Thursday, the US Dollar faced a sharp selling pressure after media reports that a deal between the United States (US) and Iran has been prepared and only needs approval from President Donald Trump.

USD/JPY technical analysis

USD/JPY ticks higher at around 159.32 in the Asian trade. The pair holds a constructive bullish bias as spot remains above the 20-day exponential moving average (EMA) at 158.78, keeping the short-term trend underpinned despite recent volatility.

The Relative Strength Index (RSI) near 56 suggests moderate upside momentum rather than overbought conditions, allowing room for further gains while price stays supported above the EMA.

On the downside, immediate support is seen at the 20-day EMA around 158.78, where buyers are likely to defend the short-term uptrend; a decisive break below this area would expose a deeper corrective move towards the May 6 high at 157.94. Looking up, the pair aims to revisit an almost two-year high at 160.74

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Offshore Yuan Set for Second Monthly Gain

The offshore yuan steadied around 6.76 per dollar on Friday, hovering near its strongest level since February 2023, bolstered by reports of an extended ceasefire agreement between the US and Iran. Both sides agreed to prolong the truce for another 60 days to allow further negotiations over Tehran’s nuclear program, although US President Donald Trump has yet to formally approve the arrangement. Meanwhile, China’s currency has drawn additional support from the global AI investment boom, which has fueled demand for Chinese technology exports and eased concerns in Beijing over yuan appreciation. For the month, the yuan remains on track for a second consecutive monthly gain despite continued weaker-than-expected daily midpoint fixings from the People’s Bank of China, as investors navigated rapidly shifting developments surrounding the Iran conflict while also assessing progress following the meeting between Presidents Donald Trump and Xi Jinping earlier this month.

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Trade of The Day: AUD/USD

  • The AUDUSD exchange rate opened today below the 10- and 30-day exponential moving averages (EMA10 – yellow, EMA30 – light purple).
  • Core PCE inflation in the US rose to 3.3% YoY in April (previously 3.2% YoY).
  • The swap market-implied probability of a US interest rate hike in 2026 increased from 82% to 86% over the course of the week.

Recommendation:

  • Position: Short (SELL) on AUDUSD at market price
  • Target Price (Take Profit; TP): 0.70550 (TP1), 0.70170 (TP2)
  • Stop Loss (SL): 0.72100

Source: xStation5

Opinion

The AUDUSD pair erased some of its losses from today’s session following the release of the latest US inflation data, which turned out slightly softer than expected. Core PCE increased in line with expectations to 3.3% year-on-year, while on a month-on-month basis, prices rose by 0.2% (against a 0.3% forecast). However, the lack of a negative inflation surprise is not exactly “good news” for monetary policy, especially since inflation remains in an upward trend and is proving to be stickier than assumed. The Fed’s narrative is also becoming increasingly hawkish. Recent remarks from Cook, Goolsbee, Kashkari, and Jefferson unanimously emphasize the growing and materializing upside risks to inflation, along with a clear readiness to hike interest rates should this trend continue.

Furthermore, the AUDUSD’s reaction to the optimism generated by hopes of a truce between Iran and the US last week was quite moderate, and the gains were insufficient to push the price above the 10- and 30-day exponential moving averages. Therefore, risk-sensitive currencies (including the AUD) can be expected to remain under heavy pressure until real progress is made in the Middle East, and a potential rebound in reaction to the end of the war is unlikely to trigger a rapid return to an upward trend for the pair. The options market is also pointing to further declines for AUDUSD. The 1-week and 1-month risk reversal indicators sit below zero, showing that options betting on the depreciation of the AUD dominate the market. In other words, the market is systematically hedging against further declines in AUDUSD consistently across various time horizons.

Methodology

The recommendation was prepared based on the technical analysis of the AUDUSD chart and the fundamental analysis of the discussed economies (monetary policy in Australia and the US). The direction of the recommendation was determined using moving averages and market expectations regarding central bank policies. Take Profit and Stop Loss levels were set using the Fibonacci retracement of the last upward wave and price action (TP1 at the 50.0 Fibo level, TP2 between the D1 interval EMA100 and the 61.8 Fibo level, and SL at the support from which the price rebounded before breaking the last peak).

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Canadian Dollar: Rebalancing offers near-term relief – BNY

Geoff Yu at BNY highlights that Canadian Dollar (CAD) dynamics differ from the U.S., with equity-based rebalancing pointing toward CAD support as growth and allocation trends move opposite to the US Dollar. Fixed income steepening and poor CAD performance are seen amplifying CAD buying signals, suggesting some relief for the Canadian Dollar into month-end.

Canadian Dollar supported by flows

“Mathematically, our figures suggest that the unwinding of USD/CAD hedges – the discontinuation of forward USD selling against CAD on U.S. positions – played a big role in the dollar’s performance and some reversion is needed.”

“The only other equity-based rebalancing signal is in the CAD, where growth and asset allocation trends are pointing in the opposite direction.”

“In contrast, CAD buying is being amplified by similar steepening in bond markets on top of poor currency performance.”

“USD and CAD have again generated the same net selling and buying signals, though the dollar’s signal is far weaker, as poor bond performance offset dollar purchases. In contrast, CAD buying is being amplified by similar steepening in bond markets on top of poor currency performance.”

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GBP recovers against US Dollar; outlook remains weak due to Iran worries

  • The British Pound recovers almost half of its early losses against the US Dollar.
  • Middle East tensions re-escalate due to the exchange of attacks between the US and Iran.
  • 10-year UK gilt yields have remained lower in the past few weeks due to easing hawkish BoE bets.

The British Pound claws back half of its early losses and rebounds to near 1.3400 against the US Dollar (USD) during the European trading session on Thursday from the intraday low of 1.3367. The recovery move in the GBP/USD pair appears to be short-lived as Middle East conflicts have re-escalated.

At press time, S&P 500 futures and Asian stock markets have also recovered significantly. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, retreats from its intraday high of 99.54, but is still 0.18% higher to near 99.40. A slight correction in the WTI Oil price has also been observed from the day’s high of $91.17 to near $90.14.

Geopolitical tensions in the Gulf region have been reignited due to the exchange of attacks between the United States (US) and Iran. Earlier in the day, Iran’s Islamic Revolutionary Guard Corps (IRGC) said that it attacked US military bases in retaliation against Washington’s strikes near Bandar Abbas airport.

This was the second attack by the US this week after the so-called “defensive strikes” on Iranian boats deploying mines and their missile launching sites.

Meanwhile, United Kingdom (UK) gilt yields have also recovered strongly after a weak opening due to Middle East concerns. 10-year UK gilt yields have rebounded to near 4.87% from the day’s low of 4.81%.

UK gilt yields have been declining in the past few weeks due to easing hopes of a near-term Bank of England (BoE) interest rate hike. Traders have pared hawkish BoE bets lately due to weakening job market conditions and lower household spending.