USD/CAD Profit Alert: Why 1.3740 is the Line in the Sand After Fed and BoC Holds

The USD/CAD has become a high stakes battleground this Thursday, 19th March 2026. As the European trading session starts to wind down, the Loonie is locked in a tight squeeze between 1.3690 and 1.3730. Traders are at the moment trying to make sense of the after effects from a real one-two punch : a double header from the Federal Reserve and the Bank of Canada who both decided to keep their interest rates on hold yesterday. As you might expect a pause like that would normally signal a calm market, but the rather hawkish undertones coming from Washington and the increasing chaos in the Middle East are causing a volatile mix for traders.

The Federal Reserve kept its benchmark rate at 3.50-3.75% – but the message being sent out was far from anything you might call calm. Fed Chairman Jerome Powell highlighted that while the rate hiking cycle might be on hold for now, the door to cuts is being pushed firmly shut by a cloudier inflation outlook. And to make things even more complicated Brent crude prices are at the moment dancing with $110 a barrel because of the rapidly escalating conflict in the Middle East.

The Fed is getting a bit worried that energy driven price shocks are going to keep inflation feeling sticky . This hawkish hold has given the US dollar a nice boost and a safe haven appeal and has kept the USD/CAD afloat even as other commodity currencies are struggling.

The Great North Pause: Why the Bank of Canada is Playing it Safe

Moving up north to the Bank of Canada , they’ve also decided to keep their policy rate at 2.25% for the third meeting in a row. Governor Tiff Macklem’s approach seems to be a cautious one – with the Canadian economy at the moment caught in a bit of a pickle. While Canada generally does well in times when oil prices shoot up, right now the global situation is a bit of a double edged sword – the BoC is weighing up the good news of high energy exports against the bad news of global trade instability and also the possibility that the economy may not be growing as well as it should be.

Recent data has shown that the Canadian unemployment rate ticked up to 6.7% in February, while the GDP growth has been pretty flat. This is actually making it a bit less likely that the BoC will follow any of the Fed’s hawkish pivots in the near term.

From a USD/CAD traders viewpoint this policy divergence is a critical tailwind for the Greenback. If the Fed is going to be “higher for longer” while the BoC is wobbling along with some domestic growth worries then the path of least resistance – for the pair at least – is going to be on the upside.

Oil at $110: The Secret Weapon Limiting Loonie Losses

The main reason that the USD/CAD is not actually breaking out to the upside is the massive surge in crude oil. With the Strait of Hormuz basically closed and the whole energy infrastructure under fire the petrodollar status of the CAD is being put to the test. Normally a 40% jump in oil prices would be sending the CAD soaring – but this time the “risk off” environment is making it a bit more complicated – investors are running to the US dollar for safety – and that is offsetting a lot of the support that the CAD would normally be getting from its energy exports.

• The pair is currently testing a very important resistance zone at 1.3740-1.3750.

• A daily close above the 100 day EMA at 1.3750 could trigger a real fast move upwards to 1.3800.

• Current RSI levels are hovering around 64 which suggests that the bullish momentum is still strong but is getting just a touch too overbought.

• Support is strong at 1.3688, and a deeper safety net is waiting at the 1.3650 handle.

USD/CAD Technical Roadmap: Is a Breakout to 1.3800 Inevitable?

Looking at the 4 hour charts we can see that the technical setup is screaming out for a decisive move to happen. The USD/CAD is currently pushing against a 1.3740 barrier that has been capping gains all week. If the bulls can clear that hurdle then the next targets are 1.3790 and 1.3845. But the RSI is getting a bit overbought and that means that a short term ” bull trap” or a period of correction is possible before the next leg up.

Traders really should keep their eyes on any news about the de-escalating situation in Iran. Any sign that tensions are cooling off is likely to see oil prices come back down and the safe haven demand for the US dollar start to fade – and in the worst case we could see the pair all the way back to the 1.3600 support zone. For now though – the “buy the dips” mentality is still in effect so long as the 50 period moving average holds its place.