Sellers Regain Control After Unsuccessful Test of Major Supply Zone

Central Bank Economic

Summary:

With the signal lines perfectly aligned with the neutral threshold, a bearish crossover appears imminent.

Sell USDCAD

End Time

CLOSED

1.36602

ENTRY

1.35530

TGT

1.37800

1.36408 -0.00015 -0.01%

264

Points

Profit

1.35530

TGT

1.36338

CLOSING

1.36602

ENTRY

1.37800

The Canadian economic landscape showed signs of stabilization in February as the S&P Global Manufacturing PMI climbed to 51.0, up from 50.4 in January. While the industrial sector gains ground, the broader market remains tethered to the volatile energy complex. Crude oil prices have sustained their upward trajectory, driven by acute supply concerns emanating from the escalating conflict in the Middle East. On Tuesday, U.S. military officials confirmed the destruction of several IRGC (Islamic Revolutionary Guard Corps) command posts, air defense systems, and missile launch sites—the latest development in a joint offensive that began last Saturday.

The Canadian Dollar (CAD) is currently deriving significant fundamental support from this surge in oil prices. However, this "petro-currency" strength is a double-edged sword; investors fear that rising energy costs could spark a renewed wave of inflation in Canada, potentially compelling the Bank of Canada to maintain a restrictive policy stance for a longer duration.

Across the border, Neel Kashkari, President of the Minneapolis Fed, addressed these concerns at the Bloomberg Invest Conference. Kashkari noted that while the war in Iran could materially impact monetary policy, it remains premature to determine the exact extent of its inflationary footprint. His sentiment aligns with Federal Reserve Governor Stephen Miran, who recently offered a cautiously optimistic view of the U.S. financial landscape. Miran argued that the banking sector is currently "over-regulated," which may be stifling credit creation, though he characterized the labor market as significantly improved. Interestingly, Miran posited that the long-term integration of Artificial Intelligence would eventually act as a "profoundly disinflationary" force.

The minutes from the January FOMC meeting further reinforced this patient approach. With several members favoring a "higher-for-longer" stance until inflation sustainably targets 2%, the CME FedWatch Tool now suggests a prolonged pause through March and April. Consequently, the probability of a June rate cut has diminished significantly as markets recalibrate to a more hawkish reality.

Geopolitical risks reached a fever pitch this week as Iran continued to deploy missile and drone strikes across the Persian Gulf. A drone strike on the U.S. Embassy in Riyadh marked a severe escalation, followed by the IRGC's effective declaration to close the Strait of Hormuz—a critical maritime chokepoint.

U.S. Secretary of State Marco Rubio has indicated that Washington is preparing for a "major increase" in strikes within Iran over the next 24 hours. This follows President Donald Trump’s warning that a "big wave is coming," underscoring the risk of a protracted conflict. In response, the State Department has urged all U.S. citizens to depart the Middle East immediately due to grave security threats. Sellers Regain Control After Unsuccessful Test of Major Supply Zone_1

Sellers Regain Control After Unsuccessful Test of Major Supply Zone_1

Technical Analysis

From a technical perspective, USD/CAD has encountered a formidable supply wall at the 1.3714 resistance level. The pair has demonstrated an inability to secure a decisive close above this handle, signaling that a technical correction is likely underway. The immediate bearish objective sits near the primary ascending trendline located around 1.3553, which currently serves as the closest major structural support.

On the 4-hour (H4) chart, the 100 and 200-period Moving Averages (MAs) are positioned at 1.3645 and 1.3679, respectively. At the time of writing, the price is closing beneath the 200-period MA. This technical breach is a significant bearish signal that could catalyze an acceleration of the downward impulse.

Our momentum analysis reinforces this bearish thesis. The RSI is currently situated at the 46 level, just beneath technical neutrality, providing ample "runway" for further downside movement before reaching oversold conditions. Simultaneously, the MACD is showing a clear dissipation of bullish momentum; the histogram bars are shrinking and on the verge of transitioning into negative territory. With the signal lines perfectly aligned with the neutral threshold, a bearish crossover appears imminent. Given the confluence of resistance rejection and moving average violations, sell-side positions are currently favored.

Trading Recommendations

Trading direction: Sell

Entry price: 1.3660

Target price: 1.3553

Stop loss: 1.3780

Validity: Mar 13, 2026 15:00:00

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