USD/CAD Price Analysis: US Dollar Rebounds as IEA Oil release weighs on CAD

• USD/CAD climbs above 1.3600 momentarily as the pair recovered early in the American session.
• WTI crude trades around $87, stabilizing after falling from a three-year high, which pressures the oil-sensitive Canadian Dollar (CAD).
• US CPI rose 0.3% MoM in February (2.4% YoY), reinforcing expectations that the Federal Reserve will maintain a cautious stance.

The USD/CAD pair is trading near the 1.3580 level, regaining its footing in Wednesday's American session after the International Energy Agency (IEA) agreed to release 400 million barrels of oil to address the supply disruption from the Iran war.

West Texas Intermediate (WTI) Oil is trading near $87 per barrel in a tight-bound range after reaching a three-year high of above $119 on Monday. This affected the Canadian Dollar (CAD) as it's being held back by the IEA news. The heavily commodity-linked currency has a symbiotic relationship with Oil.

In the United States, the Consumer Price Index (CPI) increased by 0.3% MoM in February, matching market expectations and accelerating from a 0.2% rise in January. On an annual basis, the headline CPI remained steady at 2.4% YoY, consistent with forecasts. This data supports the view that the Federal Reserve (Fed) will continue to adopt a cautious policy stance as inflation persists above the Fed’s 2% target.

Statistics Canada will release its monthly employment report for February on Friday, while the CPI for the same month will be released next Monday. This could reshape the next Bank of Canada (BoC) monetary policy decision scheduled for next Wednesday.

Short-term technical analysis

In the 4-hour chart, USD/CAD is mildly bearish as the pair holds around the 20-period Simple Moving Average (SMA) while below the 100- period SMA, which capped recovery attempts around 1.3600. The 20-period SMA is rolling over below the 100-period one, reinforcing a soft downside tone, while price action remains confined under both. The Relative Strength Index (RSI) has recovered from oversold territory but turned lower below its 50 line, indicating subdued bullish momentum and leaving sellers with a slight advantage on rebounds.

Immediate resistance is located at 1.3630, where horizontal supply converges with the nearby moving averages, and a sustained break above this area would be needed to ease downside pressure and open 1.3680 next. On the downside, initial support aligns at 1.3542, with a break lower exposing the next bearish target at 1.3525. As long as the pair trades below 1.3630, rallies are vulnerable to renewed selling into the moving average zone, keeping the short-term risk skewed to the downside.

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