The USD/CAD pair has witnessed a notable ascent, reaching a peak near 1.3830, sustained over three days of bullish activity. This uptrend in the USD/CAD price has been largely fueled by diminishing expectations for an imminent Federal Reserve rate cut.

Market sentiment has adjusted to the likelihood of the Fed postponing rate reductions in response to persistent inflationary pressures.

This perspective is further reinforced by strong U.S. Retail Sales data, which indicate vigorous consumer spending, potentially adding to inflationary trends and supporting a case for future rate hikes rather than cuts.

Geopolitical Tensions Enhance Safe-Haven Appeal of USD

Amid escalating tensions in the Middle East, particularly between Israel and Iran, there has been a marked increase in risk aversion. This geopolitical unrest has prompted investors to turn towards safe-haven assets, with the USD benefiting significantly.

The heightened investor anxiety, reflected in subdued equity market sentiments, has contributed to the strength of the USD, thereby supporting the upward movement of the USD/CAD pair.

Canadian Economic Data and Oil Price Impact

Conversely, the Canadian Dollar, closely tied to oil price fluctuations due to Canada’s significant oil exports, has seen some support from recent increases in oil prices. However, recent Canadian economic data released at 12:30 shows mixed signals.

While the Consumer Price Index (CPI) monthly rose by 0.6%, slightly below expectations of 0.7%, other metrics like the Median CPI year-over-year and Trimmed CPI year-over-year are steady at 3.0% and 3.2%, respectively.

These indicators suggest underlying strength in the Canadian economy, which could counterbalance some of the gains seen in the USD/CAD pair. In summary, the USD/CAD price forecast remains bullish due to a combination of U.S. economic strength, delayed expectations for Fed rate cuts, and global geopolitical risks.

However, movements in oil prices and Canadian inflation data present variables that could influence the pair’s trajectory, requiring investors to stay alert to changes in these fundamental drivers.

USD/CAD Price Forecast: Technical Outlook

On April 16, the USD/CAD pair’s pivot point is at $1.3816, suggesting potential for continued upward movement if it maintains this threshold.

Immediate resistance levels are identified at $1.3868, $1.3923, and $1.3976. A successful breach of these barriers could further solidify the bullish outlook.

Conversely, should the pair descend below the pivot point, it might encounter substantial selling pressure, with immediate support levels at $1.3777, $1.3725, and deeper at $1.3666.

The Relative Strength Index (RSI) stands at a high of 77, indicating that the USD/CAD may be approaching overbought conditions, which could precipitate a reversal if upward momentum is not sustained.

Meanwhile, the 50-day Exponential Moving Average (EMA) at $1.3686 continues to support the long-term bullish trend. Investors should monitor these technical levels closely as the pair navigates potential volatility in the forex market.