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USD/CAD slips as oil fears and BoC rate risk boost the Canadian dollar
Bank of Canada Governor Tiff Macklem said the central bank may need to raise rates if oil stays higher, reinforcing near term support for CAD.
USD/CAD was slightly lower around 1.4033 during Friday’s European session, with the Canadian dollar edging higher versus its peers. FXStreet attributed CAD strength to concerns that oil prices could accelerate further, noting that Canada is a net energy exporter.
The outlook for oil has improved amid threats from Iran to close the Red Sea if the United States strikes Iranian infrastructure. At the same time, FXStreet said the US dollar retained its prior recovery posture, amid fears of renewed US inflation driven by higher energy prices.
On monetary policy, FXStreet reported that Bank of Canada Governor Tiff Macklem, after leaving rates unchanged at 2.25%, said the central bank might need to raise interest rates if oil prices remain higher. That stance is described as supportive for CAD because higher rates can attract foreign capital inflows.
From a technical perspective, FXStreet said USD/CAD is trading below the 20 day exponential moving average at 1.4107 and has a Relative Strength Index of 39.6, pointing to a bearish near term bias. The analysis expects further downside toward the March 31 high at 1.3967, while it flags 1.4107 as immediate resistance.