USD/CAD Price Forecast: Surging Oil prices back further downside

• USD/CAD declines to near 1.4120 as the Canadian Dollar trades higher.
• Surging Oil prices strengthen currencies from economies that are net energy exporters.
• Investors await the US CPI data due later in the day and Wednesday's BoC monetary policy announcement.

The Canadian Dollar (CAD) trades higher against its major currency peers, except antipodeans, during the European trading session on Tuesday. The USD/CAD pair declines 0.25% to near 1.4120 at the time of writing as the Loonie gains amid improvement in the appeal of currencies from economies, such as Canada, which are net Oil exporters.

The United States (US) economy is also a net energy exporter, but the US Dollar faces selling pressure ahead of the Consumer Price Index (CPI) data for June release at 12:30 GMT.

At press time, the WTI Oil price trades 2.73% higher to near $80.00, the highest level seen in almost a month. Oil prices have increased significantly as US President Donald Trump claims that Washington is the rightful recipient of toll fees near the Strait of Hormuz.

On the domestic front, investors await the Bank of Canada’s (BoC) monetary policy announcement due on Wednesday, in which it is expected to leave interest rates unchanged at 2.25%. Investors will pay attention to comments regarding the outlook on inflation and the economy.

Meanwhile, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.1% lower to near 101.18.

USD/CAD technical analysis

Bias: USD/CAD trades lower at around 1.4120, retaining a mildly bearish near-term bias as it remains capped by the 20-day exponential moving average (EMA) at 1.4136.

Momentum: Price action sits just under this dynamic resistance, hinting at a consolidation phase after the recent pullback, while the Relative Strength Index (RSI) around 52 on the daily chart suggests neutral momentum rather than strong directional conviction.

Resistance: On the topside, immediate resistance is located at the 20-day EMA at 1.4136, and a daily close above this barrier would ease current downside pressure and open the way for a more constructive recovery. Looking up, the major barrier would be the yearly high at around 1.4248.

Support: On the downside, the pair could extend its decline towards the June 18 low at 1.4095; below that, the downside momentum could accelerate, and the pair could fall towards the psychological level of 1.4000.

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