Against the backdrop of the Iran conflict, the Canadian dollar has strengthened due to rising oil prices. Since Canada is the largest oil exporter to the U.S., higher oil prices are clearly beneficial for the CAD. Recently, volatility in international energy markets has intensified: gasoline prices in Canada have risen significantly, while U.S. employment data and inflation prospects have also been affected by rising energy costs and geopolitical tensions—market uncertainty about future economic trends is growing. Gasoline prices across Canada rose markedly over the past week, with some regions seeing increases of up to 16 cents per liter. Suzanne Gray, Senior Research Analyst at energy analytics firm Kalibrate, noted that changes in international crude oil prices quickly feed through to retail pump prices; whenever the market faces shocks, fuel prices react almost immediately. Since the U.S. and Israel launched attacks on Iran, North American crude oil prices have continued to climb, briefly exceeding $77 per barrel on Tuesday—up from around $58 at the start of this year. The surge in oil prices has once again sparked concerns about a resurgence in inflation. The Iran conflict has tightened energy markets, reminiscent of the situation after Russia invaded Ukraine in 2022, when fuel costs skyrocketed. Combined with post-pandemic demand rebounds, supply chain bottlenecks, and rising food and energy prices, inflation hit multi-year highs back then. This week, according to a report released by Bank of Montreal (BMO), if oil prices remain elevated for an extended period, inflation levels in both the U.S. and Canada could rise significantly, though this impact is expected to be mainly temporary. For many Canadians still grappling with cost-of-living pressures, higher fuel expenses remain a tangible burden. Last year, amid trade uncertainties and declining exports, Canada's economic growth reached its lowest level since the COVID-19 pandemic in 2020. Over the past week, Calgary saw the fastest increase in fuel prices among major cities: average prices rose 16 cents to C$1.36 per liter. Despite this, Calgary's prices remain below the national average, which currently stands at around C$1.41 per liter—up about 4% nationwide over the past week. Edmonton's prices are roughly C$1.30 per liter, slightly lower than Calgary's but still nearly 14 cents higher than a week ago. Other cities also saw widespread gains: Toronto rose over 4 cents to C$1.39 per liter; Montreal climbed to C$1.56 per liter; Saskatoon jumped 15 cents to C$1.37 per liter; while Vancouver dipped about 8 cents to C$1.73 per liter.

U.S. economic data, meanwhile, shows the labor market remains broadly stable. Figures from the U.S. Department of Labor revealed that seasonally adjusted initial jobless claims totaled 213,000 for the week ending February 28th—unchanged from the previous week and slightly better than economists' forecast of 215,000. Analysts believe the U.S. job market is gradually recovering from the shocks caused by last year's trade policy uncertainties. At that time, sweeping tariff measures imposed by the Trump administration pressured economic prospects; although some tariffs were overturned by the U.S. Supreme Court, the government subsequently announced a 10% global tariff (with plans to raise it to 15%). The Federal Reserve's Beige Book also noted that overall U.S. employment remains stable, with 7 of the 12 Fed districts reporting little change in hiring. However, some businesses cited rising non-labor costs, weak demand, and economic uncertainty as reasons for stagnant hiring growth. A report from global staffing firm Challenger, Gray & Christmas showed U.S. companies announced 48,307 layoffs in February—down 55% from January and 72% year-over-year. While corporate hiring plans increased 140% month-over-month, they remain 63% lower than a year ago, meaning some unemployed individuals may face longer job searches. Another data point: continuing jobless claims in the U.S. rose by 46,000 to 1.868 million for the week ending February 21st. It is worth noting that recent college graduates are typically excluded from unemployment claim data, as they often lack sufficient work history. According to a Reuters poll, economists expect U.S. nonfarm payrolls to increase by around 59,000 in February—down from 130,000 in January—but the unemployment rate is projected to hold steady at 4.3%. Against this backdrop, Federal Reserve officials face more complex judgments about future policy paths. Richmond Fed President Thomas Barkin stated that U.S. inflation remains sticky, and recent strong employment data could shift the Fed's assessment of economic risks. He noted that the Fed's previous interest rate cuts were based on expectations of rising labor market risks and falling inflationary pressures—but data in recent months seem to show the opposite trend.

The 4-hour chart shows narrowing Bollinger Bands, flattening moving averages, and persisting short-term consolidation. Prices are oscillating near the EMA12 and the Bollinger Middle Band, with the MACD and signal lines converging around the 0-line. This indicates weakening downward momentum and continued consolidation. Moreover, the pair is likely to fall toward a round-number level before rebounding. The RSI reads 44, suggesting investors are predominantly selling. Based on the daily chart, the Bollinger Bands are also narrowing, and the moving averages are flat. After a golden cross, the MACD and signal lines have pulled back to near the 0-line—downward momentum has eased, signaling an imminent trend reversal (possibly a rebound). If the pair fails to reclaim the EMA50, it will likely drop toward the Bollinger Lower Band; if it holds above, it could retest the EMA200. The RSI sits at 46, reflecting pessimistic sentiment, but with lows gradually rising, which results in limited room for downside. Thus, the strategy is to buy at lows.

Trading direction: Buy

Entry Price: 1.36

Target Price: 1.4

Stop Loss: 1.33

Support: 1.35/1.325/1.28

Resistance: 1.38/1.4/1.42