USD/CAD Price Forecast: Prepares for fresh rally above 1.3700

The USD/CAD pair trades 0.12% higher to near 1.3695 during the European trading session on Tuesday. The Loonie pair rises as the US Dollar (USD) outperforms its peers amid fears that the war between the United States (US) and Iran could resume due to the absence of a breakthrough in their negotiations.

As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.3% higher to near 98.20.

On Monday, US President Donald Trump said that the counterproposal delivered by Iran against the one-page peace proposal was a “stupid proposal” and lacked Tehran’s decision on pursuing its nuclear ambitions. Trump added, “Ceasefire is on life support.”

Though the Canadian Dollar (CAD) underperforms the US Dollar (USD), the former trades firmly against its other peers as elevated oil prices have improved its appeal. Currencies from economies, such as Canada, which are net oil exporters, tend to outperform in a high oil price environment.

Later in the day, investors will focus on the US Consumer Price Index (CPI) data for April, which will be published at 12:30 GMT.

USD/CAD technical analysis

USD/CAD trades higher at around 1.3695 at the press time. The pair holds a slight bullish bias as it trades above the 20-day exponential moving average (EMA) at 1.3680, suggesting that near-term dips remain supported.

The Relative Strength Index (RSI) around 51 hints at neutral-to-firm momentum, indicating that buyers still have a modest edge while the pair consolidates near current levels.

Looking up, the pair could extend its advance towards the April 14 high at 1.3793 if it manages to hold above the April 24 high at 1.3715.

On the downside, the 20-day EMA at 1.3680 is the immediate support; a sustained break beneath that EMA would expose a deeper correction towards the May 7 low of 1.3620.

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