USD/CAD holds firm as mixed trade headlines cloud USD outlook

• USD/CAD trades near the 1.3900 zone in a tight range ahead of the weekend
• Contradictory US-China tariff headlines and resilient oil prices shape sentiment
• Resistance is seen at 1.3893 and 1.3986, with support at 1.3855

The USD/CAD pair holds steady around the 1.3900 zone on Friday as markets weigh fresh US-China trade headlines and stronger oil prices against a firmer Greenback. The US Dollar Index (DXY) is trading higher near 99.60, supported by comments from US President Donald Trump suggesting talks with China are ongoing. However, these claims were quickly disputed by the Chinese Foreign Ministry, which said no negotiations were underway, creating confusion and limiting bullish follow-through in USD/CAD.

The mood remains fragile as traders digest mixed trade signals. While Trump claimed progress on negotiations with Beijing, China firmly denied any ongoing tariff consultations, emphasizing that the US should "stop creating confusion." This contradiction has kept risk appetite in check, weighing on US equity futures and tempering the DXY's recent rebound.

Oil prices remain a supportive factor for the Canadian Dollar. Brent crude hovers above $68 per barrel after surging earlier this week, buoyed by US sanctions on Iranian oil and reports that China may reduce certain US import tariffs. While OPEC+ production increases are expected in May and possibly June, their net effect is likely to remain limited if offset by compensatory cuts, according to Commerzbank analysts.

Technical outlook

USD/CAD is flashing an overall bearish signal, trading flat near 1.3900 and consolidating within the intraday range of 1.3846 to 1.3893. The Relative Strength Index (RSI) sits neutrally at 36, while the Moving Average Convergence Divergence (MACD) shows a sell signal, hinting at downward pressure.

Momentum indicators are mixed. The Stochastic RSI Fast (near 41) and the Bull Bear Power (close to 0) both suggest indecision, failing to confirm a directional bias. However, trend-following signals remain bearish. The 20-day, 100-day, and 200-day Simple Moving Averages at 1.4017, 1.4270, and 1.4009 respectively all slope lower, reinforcing the negative tone. Bearish cues are also seen in the 10-day EMA at 1.3893 and the 10-day SMA at 1.3863.

Support rests at 1.3855, just above this week's low. A break below would expose 1.3800 and 1.3745 next. On the upside, resistance is found at 1.3863, 1.3893, and the psychological 1.3986 zone. Unless USD strength regains momentum or oil prices pull back sharply, the bias for USD/CAD remains skewed to the downside.