The pair gains as USD strengthens on inflation concerns and Loonie weakens amid lower crude prices and US-Canada trade tensions.
The USD/CAD pair climbed 0.15% to 1.3865 in early European trading, extending a two-day recovery from a three-month low near 1.3730. The US Dollar found support as energy-driven inflation risks kept Fed rate hike expectations alive, while geopolitical tensions added to its safe-haven appeal.
Technical indicators turned constructive, with the Relative Strength Index near 62 and MACD readings in positive territory. A break above the 23.6% Fibonacci retracement level of the June-August decline signaled potential for further upside, though resistance looms at 1.3900.
The Loonie faced pressure from a modest decline in crude oil prices and escalating US-Canada trade disputes, reinforcing the pair’s upward momentum.