Insights 
VT 
The USD/CAD exchange rate increased due to a combination of monetary policy differences and safe-haven demand, approaching the 50-day Simple Moving Average below the 1.3800 level. The currency pair reached 1.3780, after hitting an intraday high of 1.3803, marking its fifth consecutive day of gains.
US airstrikes on Iranian nuclear sites escalated Middle East tensions, impacting global markets and supporting the US Dollar. Despite increased oil prices, risk-sensitive assets experienced limited growth while the US Dollar gained strength against major currencies.
Canadian Retail Sales Impact
Canadian retail sales data indicated a 1.1% decline in May, following a 0.3% rise in April, pointing to reduced consumer demand. Concerns over Canada’s economic outlook contributed to expectations of additional interest rate cuts by the Bank of Canada.
Technically, USD/CAD faces resistance at the 50-day Simple Moving Average near 1.3803, with a potential test of the 1.3823 level if broken. Support is found at the 20-day SMA at 1.3704, with further support around 1.3640. The Relative Strength Index suggests a neutral-to-slightly bullish short-term momentum.
The USD/CAD has edged higher, fuelled by diverging interest rate paths and increased demand for the greenback amid geopolitical uncertainty. As it flirted with the 50-day Simple Moving Average just under 1.3800, the pair posted a session high of 1.3803 before retreating slightly, notching up a fifth straight day of gains in the process. That, in itself, points to persistent bullish pressure.
The upward move gained traction as tensions in the Middle East resurged following US action targeting Iranian nuclear infrastructure. That development injected fresh nervousness into broader markets and spurred capital rotation into shelter assets, with the US Dollar benefiting disproportionately. While oil prices ticked higher — typically a tailwind for Canada’s economy — broader risk aversion meant that higher crude benchmarks failed to lift related assets in tandem.
Technical Analysis and Support Levels
On the domestic economic front, recent Canadian figures added to the downside pressure. Retail sales in May contracted by 1.1%, eroding the moderate 0.3% gain recorded the previous month. This suggests Canadian households have become more cautious, possibly reacting to elevated borrowing costs or weakening real wage growth. As we see it, this kind of data feeds into the notion that policymakers in Ottawa are more likely to loosen rather than tighten monetary settings in the near future.
From a technical perspective, the pair is contending with a notable resistance area at the 50-day simple moving average. A firm push and daily close above the 1.3803 region could open the door to a near-term extension towards the 1.3823 level. We’re keeping an eye on price behaviour around these thresholds — momentum may fade here unless further catalysts arise.
Nearer-term support is forming at the 20-day SMA, situated around 1.3704. If a pullback gathers pace, there’s another band of interest down at 1.3640, which acted as a floor during previous downward moves. Oscillator readings, while not stretched, are leaning marginally to the upside, implying that pressure could remain on resistance in the days ahead.
Participants should be aware that these price movements are not operating in a vacuum. They are the result of compounded macro inputs: a blend of situational risk appetite, diverging interest rate paths, and economic performance across borders is shaping this pair’s trajectory. Careful monitoring of upcoming economic prints and any shift from policy-setters, particularly in light of incoming inflation figures, will be necessary before adding to existing positions. Timing entries around support levels with confirmation of directional bias may present the more favourable risk-reward equations in the immediate term.
