The pair pulls back slightly from year-to-date highs as Fed rate hike bets and Middle East tensions support the USD.
The US Dollar (USD) edges lower against the Canadian Dollar (CAD) on Tuesday, retreating from a near-yearly high of 1.3966. The pullback follows a steady rally driven by expectations of Federal Reserve tightening and safe-haven demand amid geopolitical uncertainty in the Middle East.
Despite the dip, the bullish trend remains intact, supported by strong US macroeconomic data released last week. Investors remain cautious, however, as Middle East tensions persist, and skepticism lingers over potential Fed rate hikes this year if inflation pressures continue.
Technical indicators suggest weakening momentum, with the Relative Strength Index (RSI) showing bearish divergence and the Moving Average Convergence Divergence (MACD) crossing below its signal line. Support levels are seen at 1.3925 and 1.3905, while resistance remains near recent highs.