Canadian bank strategists expect USD/CAD rallies to attract sellers, with support near 1.3720 ahead of a possible retreat towards 1.3500-1.3550. The US Dollar to Canadian Dollar (USD/CAD) exchange rate edged higher on Wednesday after two consecutive daily declines, as traders assessed fresh US restrictions on Canadian goods.
At the time of writing, USD/CAD was up 0.12% at 1.3795, recovering some of Tuesday’s 0.20% fall.
Latest — Exchange Rates:
Dollar to Canadian Dollar (USD/CAD): 1.37947 (+0.12%)
Pound to Canadian Dollar (GBP/CAD): 1.870651 (+0.26%)
Euro to Canadian Dollar (EUR/CAD): 1.606438 (+0.28%)
Foreign exchange strategists at Scotiabank expects the broader decline to resume, with improving Canadian Dollar fundamentals supporting its bearish view of the pair.
“USD support is 1.3715/35 ahead of the decline back to the 1.3500/50 region.”
That puts the bank’s first support area at 1.3715-1.3735, followed by a potential move towards 1.3500-1.3550.
Trade restrictions draw a muted response Washington’s latest measures will ban certain Canadian dairy products, motorcycles and most alcoholic beverages from September 29, following Canada’s retaliatory tariffs on US goods.
Scotiabank reported little immediate currency reaction to the announcement, following a similarly restrained assessment of President Trump’s weekend comments about Canada’s exchange rate.
“If the White House does have a beef with the low CAD, some further clarity is required.”
The bank’s estimated fair value for USD/CAD has edged down to 1.3736, below the current market rate.
This is a model estimate of equilibrium rather than a dated exchange-rate target, but its direction supports Scotiabank’s assessment that underlying Canadian Dollar drivers are improving.
Image: USD to CAD exchange rate 3-month chart The Canadian bank argues that last week’s failed US Dollar recovery established firm resistance in the low-to-mid 1.39 area.
“Trend momentum is USD-bearish across short-, medium-, and long-term studies, meaning that moderate USD gains (through the mid-1.38s) are likely to draw selling interest.”
We think that makes the response to a rebound towards 1.3850 particularly useful in judging this prediction.
Renewed selling there would reinforce Scotiabank’s call, while a sustained recovery into the 1.39 area would challenge its expectation that the downtrend is resuming.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
Bank of Canada má ve středu ponechat úrokovou sazbu na 2,25 %, ale trh už započítává dřívější zvýšení než konsenzus Reuters. Pro USD/CAD bude klíčový tón prohlášení a tiskové konference Macklema.
TL;DR: The Bank of Canada’s Wednesday hold at 2.25% is fully priced, but economist consensus (first hike in Q4 2027) and market pricing (roughly 1.76 hikes by March 2027) disagree sharply on what comes next — making the statement’s tone, not the decision itself, the real driver for USD/CAD.
Everyone Expects a Hold. Almost Nobody Agrees on What Happens Next The Bank of Canada is expected to leave its rate at 2.25% on Wednesday. All 35 economists surveyed by Reuters forecast a hold, and market pricing agrees. If that’s all traders cared about, this would be a low-drama meeting. But the agreement ends almost immediately after Wednesday.
The Reuters consensus sees the first BoC hike only in Q4 2027. Among economists who provided a forecast, fewer than half expect even one increase by the end of Q2 2027. CIBC’s Avery Shenfeld describes the Bank as being in a “watchful-waiting stance,” with inflation concerns roughly balanced by growth risks from the Canada-US trade conflict.
Markets aren’t waiting nearly that long. OIS pricing as of Sept. 1 embeds roughly 1.76 quarter-point hikes by March 3, 2027, with that meeting carrying around 76.8% marginal probability of an increase. In other words, the market’s center of gravity for tighter policy sits several quarters ahead of economist consensus.
That’s the real story heading into Wednesday: the hold is priced; the timing of the next hike is not.
Survey Says Late 2027. Some Banks Say October. There’s an important reason not to treat the survey-market gap as a simple contest over who has the better forecast. Each economist in a Reuters poll submits a single path they consider most likely. Markets have to price every plausible path at once. A smaller probability of something much more hawkish can therefore drag OIS pricing forward even if most forecasters still expect a long pause.
National Bank and Scotiabank show exactly what that hawkish scenario looks like. Both expect the BoC to hike to 2.50% in October and again to 2.75% in December — more than a year ahead of the Reuters consensus.
OIS doesn’t say those banks are right. October remains a minority outcome. But it says the possibility is real enough to matter. So there are really three positions rather than two: most economists expect the BoC to wait until late 2027, National Bank and Scotia see tightening beginning this autumn, and markets sit somewhere in between — pricing an earlier move than consensus without fully embracing the aggressive 2026 path.
Two New Forces May Be Pulling Pricing Forward The difference between probability-weighted market pricing and single-path forecasts is the most defensible explanation for the gap. But the timing also raises two interesting questions.
The Reuters poll closed on Aug. 28, before renewed US-Iran fighting pushed Brent back above $90. Canada is an oil exporter, so higher crude can support CAD directly, while persistent energy inflation could also make the BoC less comfortable leaving rates unchanged for an extended period. It’s plausible this week’s oil shock has pushed Canadian rate expectations higher — we can’t prove that without a comparable OIS snapshot from before the escalation, so it should remain a hypothesis rather than a conclusion.
US rates are another possibility. Treasury yields have surged after Warsh’s Jackson Hole speech, and the US 10-year is now challenging 4.8%. Canadian OIS could be participating in a broader North American rates repricing rather than reflecting a purely domestic rethink. That distinction will become clearer if Canadian pricing starts moving independently after Wednesday.
With No New Forecasts, Watch Every Change in Tone There’s no new Monetary Policy Report this week — the next MPR comes Oct. 28. That strips away one of the usual numerical signals and leaves statement language and Governor Macklem’s press conference with more work to do.
A more hawkish Bank would give OIS pricing greater credibility. Markets will listen for less concern about trade-related downside risk, greater emphasis on inflation near the top of the 1–3% target band, or any suggestion that recent economic resilience has reduced the need for caution.
A more dovish tone would strengthen economist consensus. If the BoC continues emphasizing weak demand, trade uncertainty, and temporary or externally driven price pressure, the argument for waiting well into 2027 would become easier to defend.
Governor Macklem and Senior Deputy Governor Rogers speak at 10:30 ET, and with the rate itself almost predetermined, changes in emphasis — or conspicuous omissions from July’s message — could drive the Canadian Dollar reaction.
Friday Tests Both Sides of USD/CAD Wednesday may not even be the most important day for the pair this week. Canada and the US both release employment reports Friday, Sept. 4.
Canada enters the report with a surprisingly constructive recent trend. Employment has risen for three consecutive months, with roughly 181,000 jobs added since April, while unemployment fell to 6.4% in July, the lowest in two years. If that continues, the market’s earlier BoC-hike pricing gains another argument. If the labor market rolls over, the watchful-waiting camp gets stronger evidence that the Bank should stay patient.
Then there’s US NFP. Strong US jobs could reinforce Warsh-driven Fed repricing and support the Dollar even if Canadian data are solid. Weak NFP could undercut the USD side of the pair. Wednesday tests BoC expectations. Friday tests both sides of USD/CAD.
Oil Could Reinforce CAD, or Complicate the Whole Trade Brent around $92 adds another variable. Oil is pressing toward the upper side of a multi-week triangle, with descending resistance around $94.83 and rising support near $84.56. Renewed US-Iran confrontation means either boundary could become vulnerable to a headline-driven break.
A sustained rise in crude would normally favor CAD through Canada’s terms of trade. In the current cycle, though, it could also feed inflation concerns and strengthen the case for earlier BoC tightening, giving the Canadian Dollar a second channel of support. But geopolitical oil shocks also feed US inflation and Treasury yields, so oil isn’t a one-directional USD/CAD signal — it’s another reason to avoid treating the current OIS-survey gap as settled before this week’s events play out.
ActionForex’s Technical View on USD/CAD: Bounced, But Not Reversed The charts tell a similarly unresolved story. USD/CAD has recovered from 1.3730, but the bounce still looks corrective against the decline from 1.4247. Last week’s broad Dollar strength wasn’t enough to push the pair through 1.3927, the 38.2% retracement of that fall, and price remains below descending near-term resistance.
Momentum is neutral. The 4H RSI is around 50 and the MACD is hovering close to zero — neither supports the claim that a new bullish trend has begun.
As long as 1.3927 caps upside, another move lower remains favored. A break of 1.3823 would be the first sign the rebound is ending and put 1.3730 back in focus. A break of 1.3730 would resume bearish pressure and reopen the larger downside.
The alternative is clear too. A firm move above 1.3927 would invalidate the immediate bearish setup and target 1.4002, where former support has turned into resistance.
1.4002 Separates Correction From a Bigger Reassessment The daily chart puts that near-term battle into broader context. The recovery from 1.3480 is still treated as corrective within the medium-term downtrend. It may already have completed as a three-wave rise to 1.4247, or that move may represent the first leg of a larger correction. Either interpretation still allows another test of 1.3480 while 1.4002 holds.
This creates a clean fundamental-technical bridge for Wednesday. If the BoC sounds comfortable waiting well into 2027, USD/CAD could finally push through 1.3927 and test whether 1.4002 can hold. If Macklem sounds closer to the market’s earlier tightening timeline, the rebound from 1.3730 could fail before those levels and the broader bearish structure would stay intact.
Either way, Wednesday’s answer is unlikely to come from the 2.25% printed at the top of the decision. It will come from how the Bank talks about what happens next — and whether that sounds more like economist consensus, market pricing, or the increasingly hawkish minority already calling for an October hike.
Key Takeaways Wednesday’s BoC hold at 2.25% is fully priced by both economists and markets, but the two diverge sharply on timing: Q4 2027 (Reuters consensus) versus roughly 1.76 hikes priced by March 2027 (OIS). National Bank and Scotiabank represent the hawkish tail, expecting hikes to 2.50% in October and 2.75% in December, more than a year ahead of consensus. With no new Monetary Policy Report this week, statement language and Macklem’s press conference tone carry more weight than usual for gauging which camp is right. Friday’s dual Canada-US employment reports may matter more than Wednesday’s decision, testing both the BoC repricing story and the Warsh-driven Fed repricing simultaneously. USD/CAD stays capped below 1.3927 resistance for now; a hawkish BoC tone could push through toward 1.4002, while a dovish tone risks a break of 1.3823 and a retest of 1.3730.
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Canada’s 3.3% Q2 rebound supports the Loonie, but Scotiabank sees USD/CAD wrestling with 1.39 as the broader Dollar regains momentum. The US Dollar to Canadian Dollar (USD/CAD) exchange rate ended Friday around 1.3903, extending its late-August rebound despite another strong batch of Canadian economic data.
USD/CAD has still fallen around 0.8% during August and almost 1.5% over the past month, but the pair has recovered sharply from the 1.3733 low reached on 22 August.
Scotiabank analysts had expected the Canadian economy to confirm a solid rebound after the weakness around the turn of the year.
“The Canadian economy appears to have rebounded firmly after the weak period around the turn of the year and Q2 growth seems to be tracking a little above 3%,” the bank said.
That call proved accurate.
Statistics Canada reported that real GDP expanded 0.8% quarter-on-quarter in Q2, equivalent to an annualised 3.3%, the fastest pace since 2023.
Exports rose 3.6%, household consumption gained 0.8% and business investment increased 2.3%, while June GDP also beat Scotiabank’s 0.2% expectation with a 0.3% increase.
The Canadian Dollar barely moved.
USD/CAD climbed towards 1.3908 instead as Kevin Warsh’s Jackson Hole comments drove the broader US Dollar higher and lifted expectations for a September Fed rate increase.
Image: USD to CAD rate 1-month chart Scotiabank Outlook: CAD Fundamentals Have Improved Scotiabank had already warned that good Canadian numbers were becoming less capable of surprising the FX market.
“Solid data is perhaps already priced in to the CAD to a degree, given that domestic data have generally outperformed expectations in recent weeks,” it said, although stronger GDP could “add modestly to CAD tailwinds in the short run.”
The bank’s fair-value work also suggested the USD/CAD exchange rate had little reason to move dramatically away from the high-1.38s.
“Spot continues to track our fair value estimate closely,” Scotiabank said, with its equilibrium estimate falling to 1.3865 before the GDP release.
Friday’s close at 1.3903 therefore leaves the pair only modestly above that estimate.
The more interesting question is whether the Dollar’s post-Warsh rally can overpower the improving Canadian backdrop.
A Reuters poll published Friday found all 35 economists surveyed expect the Bank of Canada to leave rates unchanged at 2.25% next week, with most also expecting no policy change for at least another year.
That removes the prospect of an immediate BoC catalyst, leaving US rates and the worsening Canada-US trade dispute unusually important for the cross.
USD/CAD Technical Forecast: 1.3900 Is Becoming a Useful Pivot Scotiabank’s technical assessment remains officially neutral, but there are bearish signals underneath.
“The USD is maintaining, just about, its push above the 200-day MA (1.3840),” the bank said, while warning that the previous soft close could be a “heads up” that the Dollar rebound was beginning to stall.
“Daily and weekly trend oscillators remain bearish,” with intraday momentum also looking soft.
The levels are relatively clean.
Scotiabank places minor resistance around 1.3895/1.3900, followed by firmer resistance in the mid-to-upper 1.39s.
Support stands at 1.3825/30, with a stronger floor around 1.3775/85.
Friday’s close just above 1.3900 means that first resistance zone is already under pressure.
That contrasts with our recent UBS USD/CAD forecast, where the bank saw scope for near-term support before an eventual decline towards 1.36 during 2027.
Scotiabank is more tactical here.
Canada’s economy is performing well enough to support the Loonie, and its fair-value model sits below spot, but USD/CAD needs to get back under 1.3840 before the technical picture starts looking convincingly bearish again.
For the immediate outlook, 1.3900 is the battleground, 1.3825 the first downside target and the upper 1.39s the level that would signal the Dollar rebound has more room to run.
The Canadian Dollar strengthened as oil prices extended their advance and renewed pressure on the US Dollar pushed USD/CAD towards fresh August lows. The Canadian Dollar gained further ground on Thursday, with firmer crude prices and a softer US currency reinforcing a move that has gathered pace over the past week.
The US Dollar to Canadian Dollar (USD/CAD) exchange rate traded around 1.3776, down 0.25% on the day and 1.09% lower over five sessions.
Latest — Exchange Rates:
Pound to Canadian Dollar (GBP/CAD): 1.880004 (+0.10%)
Euro to Canadian Dollar (EUR/CAD): 1.610518 (-0.11%)
Dollar to Canadian Dollar (USD/CAD): 1.37752 (-0.26%)
WTI crude was also up more than 1% near $85.58 a barrel as the Strait of Hormuz standoff kept supply risks elevated.
Oil Prices and Fed Expectations Support the Loonie The Canadian currency has benefited from the combination of higher energy prices and fading expectations that the Federal Reserve will deliver another near-term rate increase.
Reuters market commentary highlighted both themes as supportive for the Loonie, while Wednesday's US Treasury decision to increase long-dated bond buybacks also pulled US yields lower and weighed on the Dollar.
The move leaves USD/CAD testing an important area around 1.3770 after falling more than 2% over the past month.
ING strategists Chris Turner and Francesco Pesole remain cautiously constructive on the Canadian Dollar, saying that “broader USD weakness can still drive USD/CAD down to 1.38 by year-end.”
MUFG's latest projections similarly envisage USD/CAD easing from 1.41 in the third quarter towards 1.39 by year-end and 1.36 by the second quarter of 2027.
The immediate Canadian Dollar outlook will remain closely tied to oil and US rate expectations. A sustained break below 1.3770 would strengthen the case for a deeper USD/CAD retreat, while renewed Treasury-yield pressure would threaten the latest gains.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
Trump odložil plánovaná 50% cla na zhruba 20 miliard USD kanadského zboží o tři dny a uvedl, že USA a Kanada mají dohodu. To snižuje riziko pro USD/CAD.
Trump delays threatened 50% tariffs on Canadian goods
US-Canada deal puts Keystone XL pipeline back on the table
USD/CAD tariff tail risk materially reduced
As alluded to in a separate analysis piece released on Tuesday, one of the key headwinds overhanging USD/CAD was the status of tariff negotiations between the United States and Canada. Well, it looks like Donald Trump has brought TACO to the tariff negotiations.
In a Truth Social post, Trump said the slated 50% tariffs on roughly US$20 billion of Canadian goods, which had been due to kick in tomorrow morning, have now been postponed for three days. More importantly, he said the two sides, subject to the finalisation of documents, “have a DEAL!”
Source: Truth Social
Of note, after repeated setbacks in trying to secure cheaper energy from the Gulf, energy infrastructure looks to be at the centre of the agreement. With talks between the United States and Iran now effectively dead, Trump appears to be looking north for another route to eventually deliver lower US energy prices. He immediately linked the tariff reprieve to the Keystone XL pipeline.
Trump approved the project during his first term, only for the Democrats to pull the plug after returning to power. Now, more than five years later, it looks like it may be back on the table.
Bullish reversal risk recedes
Source: TradingView
Having flagged bullish reversal risks a little over 24 hours ago, USD/CAD did pop higher on Tuesday, with the close roughly in line with the midpoint of Monday’s bearish candle, completing a three-candle morning star reversal pattern in the process.
However, the latest news flow immediately raises questions about the validity of that signal, with USD/CAD pulling back from minor horizontal resistance at 1.3910. The pair remains stuck in a narrow range between that level on the topside and a support zone running from 1.3870 down to the 200-day moving average at 1.3851. Those are the two immediate focal points for traders.
Given the reaction to the tariff news, the risk of a resumption of the broader bearish trend may be increasing, putting the emphasis on a potential break beneath the lower end of that support zone. If that were to occur, 1.3775 is the first level to watch, followed by a more pronounced support zone around 1.3714, the 78.6% Fibonacci retracement of the September 2024 to January 2025 bull move. That area has seen plenty of work over recent months, acting as resistance for lengthy periods earlier this year.
If the bullish price signal proves more prescient, the immediate focal point above 1.3910 is the 100-day simple moving average at 1.3919, where the price bounced on several occasions before breaking lower earlier this week. A break above would put horizontal resistance at 1.3967 in play, with 1.3991 another minor level overhead before the broader downtrend from the July highs comes into play.
The message from the oscillators still favours selling into strength. RSI (14) continues to trend lower and sits marginally above oversold territory at 32, while MACD confirms the message, continuing to trend lower in negative territory after crossing its signal line from above.
FOMC minutes loom
The FOMC minutes from the July meeting screen as the most likely fundamental catalyst to determine the next move in USD/CAD. With Fed tightening expectations having been pared sharply following the recent run of softer US data, traders will be watching for signs of whether the hawkish dissents seen at the meeting extended more broadly across the committee.
USD/CAD se odráží k 1,3900, protože obchodníci sledují středeční deadline možných 50% amerických cel na kanadský dovoz. Kanadská inflace sice vzrostla na 3,0 %, ale jádrová inflace zůstala mírná.
USD/CAD is attempting to extend its recovery on Tuesday as traders look beyond Canada’s hotter July inflation report and turn their attention to an increasingly important US-Canada trade deadline. The pair was trading around 1.3897 at the time of writing, having recovered from a recent low near 1.3850. The rebound puts the psychological 1.3900 level back in focus after USD/CAD spent much of August under selling pressure.
The Canadian dollar initially benefited from Monday’s inflation figures, but that support has faded as investors assess whether the increase in headline CPI is enough to materially alter the Bank of Canada interest rate outlook. More importantly, currency markets are now preparing for Wednesday’s deadline for potentially steep US tariffs on Canadian goods, making trade policy a significant near-term risk for the loonie.
Canada CPI Hits 3.0%, but Core Inflation Tells a Different Story Canada’s annual inflation rate accelerated to 3.0% in July from 2.8% in June, reaching the upper end of the Bank of Canada’s 1% to 3% inflation-control range. The increase was largely driven by gasoline prices, which jumped 25.7% year over year, while higher travel costs also contributed to the rise. On a monthly basis, CPI increased 0.5%. However, the underlying inflation picture was considerably less concerning.
The Bank of Canada’s closely watched CPI-trim measure stood at 1.9%, while CPI-median was 2.0%. Inflation excluding food and energy was also 1.9%, suggesting the acceleration in headline prices has not yet developed into broad-based inflationary pressure.
That distinction matters for the Canadian dollar outlook. A headline CPI reading of 3.0% would normally strengthen expectations for tighter monetary policy and potentially support the loonie. However, contained core inflation gives the Bank of Canada more room to wait before making its next move, particularly while the economy faces substantial uncertainty from US trade policy.
As a result, Monday’s inflation report has not been enough to prevent USD/CAD from recovering.
US-Canada Tariff Deadline Becomes the Next USD/CAD Catalyst Attention has now shifted firmly toward trade negotiations between Washington and Ottawa. The United States has threatened to impose 50% tariffs on roughly $20 billion of Canadian imports beginning Wednesday, representing a potentially significant escalation in the trade dispute between the two countries.
Canadian Prime Minister Mark Carney spoke with US President Donald Trump on Tuesday as officials continued last-minute negotiations aimed at preventing the tariffs from taking effect. However, significant disagreements remain, particularly around automobiles and existing US tariffs on Canadian goods. For USD/CAD, the outcome could overshadow Monday’s inflation data.
A last-minute agreement, postponement or softer tariff framework could remove an important source of uncertainty for the Canadian economy and potentially strengthen the loonie. Conversely, implementation of the proposed 50% tariffs could raise concerns about Canadian exports, business investment and economic growth. That makes Wednesday’s deadline a potential volatility event for the USD/CAD exchange rate.
USD/CAD Technical Analysis: 1.3900 Back in Focus The four-hour chart shows USD/CAD attempting to recover after its prolonged decline from the July highs. The pair recently found support around 1.3850, before rebounding to approximately 1.3897. Price has also moved back above the 20-period Bollinger Band moving average near 1.3885, providing an early indication that short-term momentum is improving.
The MACD reinforces that recovery signal. Although both the MACD and signal lines remain below zero, the MACD line has crossed above its signal line and the histogram has turned positive. This suggests bearish momentum is weakening after the recent selloff.
Immediate resistance sits around 1.3900, followed by the upper Bollinger Band near 1.3932. A sustained move above 1.3930 could strengthen the rebound and expose the previous resistance zone around 1.3950.
On the downside, 1.3850 remains the key support level, closely followed by the lower Bollinger Band around 1.3838. A break below this region would restore the bearish structure and increase the risk of another leg lower.
USD/CAD Outlook: Can the Canadian Dollar Resume Its Rally? Despite Tuesday’s rebound, the broader USD/CAD price trend remains bearish, with the pair having fallen substantially from levels above 1.4100 in late July. For buyers, reclaiming 1.3930 to 1.3950 would provide stronger evidence that the current move is developing into something more than a short-term correction.
For sellers, failure to establish a sustained break above 1.3900 would leave the recent 1.3850 support vulnerable to another test. The tariff deadline may ultimately decide which side gains control. With Canada’s CPI report now behind the market, US-Canada trade negotiations have become the most immediate catalyst for the USD/CAD price forecast, and Wednesday could determine whether the pair extends its recovery or resumes the broader decline.
Why is USD/CAD rising today?
USD/CAD is rebounding toward 1.3900 as the Canadian dollar loses some of the support it received from Canada’s July inflation report. Traders are also positioning ahead of the US-Canada tariff deadline, which could have significant implications for the Canadian economic outlook.
How did Canada’s CPI affect the Canadian dollar?
Canada’s July headline CPI accelerated to 3.0% year over year from 2.8% in June. However, underlying inflation measures remained considerably softer, limiting expectations that the Bank of Canada will need to respond aggressively to the headline increase.
What could move USD/CAD next?
The US-Canada tariff deadline is the main near-term catalyst. Any agreement, postponement or escalation in tariffs could trigger volatility in the Canadian dollar and USD/CAD. Traders will also continue monitoring oil prices, US economic data and Bank of Canada interest rate expectations.
Kanadský dolar po červencové CPI, která vzrostla na 3,0 % meziročně a překonala odhad 2,9 %, krátce posílil na nejsilnější úroveň od 1. června. Zisky ale později odevzdal a USD/CAD se vrátil téměř beze změny.
The Canadian Dollar reached its strongest level since 1 June after July CPI beat forecasts, although the advance later faded. The Canadian Dollar initially strengthened on Monday after headline inflation reached the top of the Bank of Canada’s target range, but the advance was not sustained.
Immediately after the 13:30 BST release, the Canadian currency was 0.17% firmer and USD/CAD traded near 1.3851.
USD/CAD subsequently touched 1.3845, marking the Canadian Dollar’s strongest level since 1 June, before recovering towards 1.3874 much later in the session and returning close to unchanged on the day.
Later ERUK exchange rates data placed GBP/CAD near 1.8790 and EUR/CAD around 1.6064, both slightly higher on the day.
A simultaneous release showed foreign investors bought a net C$40.83bn of Canadian securities in June, led by federal government bonds.
The Statistics Canada CPI release showed prices rising 3.0% year on year in July, up from 2.8% in June and above the 2.9% consensus forecast.
On a non-seasonally-adjusted basis, the index climbed 0.5% on the month, compared with expectations of 0.4%, while the seasonally adjusted increase was 0.3%.
Gasoline inflation accelerated to 25.7% from 20.5% as renewed US-Iran tensions lifted energy costs, while air transportation prices rose 12.0%.
Food bought from stores provided some relief, slowing to 3.1% from 3.9%, and shelter inflation remained contained at 1.3%.
Core Inflation Leaves a Two-Sided BoC Signal The Bank of Canada’s preferred year-on-year measures remained close to 2%, with CPI-trim at 1.9% and CPI-median at 2.0%.
That steadier six- and 12-month picture led BMO Economics senior economist and director Robert Kavcic to conclude that “the inflation side is looking stable and well-behaved despite a bit of heat in July”.
Shorter-term measures were firmer, however.
BMO calculated that the average three-month annualised pace across four core gauges rose to 2.5% from 2.0%.
The faster gauges prompted Scotiabank economist Derek Holt to warn that “measures like these lean against staying at the low end of the BoC’s neutral rate range”.
Scotiabank reported that markets priced 16 basis points of a possible quarter-point increase by year-end, although the annual core readings offered little basis for an immediate policy response.
Growth supplied the more favourable side of the outlook, with Royal Bank of Canada assistant chief economist Nathan Janzen and economist Abbey Xu describing “a relatively favourable combination of firming economic growth and underlying inflation close to target”.
Trade risks nevertheless complicated that view.
The RBC economists noted that new US duties on selected Canadian goods were due to take effect on 19 August, although their narrow coverage was unlikely to derail the broader recovery.
Image: USD/CAD, GBP/CAD, EUR/CAD and CAD/JPY around Canada’s July CPI release at 13:30 BST. At the Bank of Canada’s 2 September decision, policymakers will weigh firmer short-term core momentum against stable year-on-year gauges and renewed trade uncertainty.
USD/CAD extends its decline farther below 1.4000 on Friday and heads for a third consecutive weekly loss. At the time of writing, the pair trades around 1.3877, at levels last seen in early July.
The recent strength in the Canadian Dollar (CAD) is driven by broad US Dollar (USD) weakness and relatively stronger Canadian economic data, while elevated Oil prices provide underlying support to the commodity-linked Loonie.
Monetary policy expectations remain in focus. In the US, moderating inflation, weaker consumer spending and signs of labour market softness have lowered the chances of a Federal Reserve (Fed) interest rate hike next month. Across the border, next week’s Consumer Price Index (CPI) report will provide a fresh update on inflation and its possible impact on the Bank of Canada’s (BoC) policy path.
BoC seen prioritising soft core inflation as output gap closes only graduallyAccording to TD Securities, the Bank of Canada is likely to place greater emphasis on the “softer trajectory for core inflation” at its 2 September decision, noting that the limited “passthrough from higher oil prices gives it more scope to continue looking through the energy shock.” The bank adds that the “recent deceleration across core inflation measures also helps to validate the Bank's assessment around excess supply and capacity to absorb stronger growth amid the rebound in Q2 GDP tracking.”
In TD’s view, this backdrop “should allow the Bank of Canada to stick to its recent messaging next month, with a focus on softer underlying inflation and the gradual timeline to close the output gap.”
Technical analysis
From a technical perspective, USD/CAD maintains a steady downtrend, forming a series of lower highs and lower lows since reversing from above 1.4200 in late June. The pair subsequently slipped below the 50-day Simple Moving Average (SMA), while the latest leg lower has pushed it beneath the 100-day SMA.
The Relative Strength Index (14) around 29 signals oversold conditions and warns that downside momentum may be stretched even as the Moving Average Convergence Divergence (MACD) remains in negative territory.
On the downside, immediate support is aligned with the 200-day SMA close to 1.3850, ahead of a more substantial horizontal floor at 1.3700, with a deeper bearish extension exposing the structural level at 1.3542.
On the topside, a recovery attempt would first face resistance at the 100-day SMA at 1.3920, with any stronger rebound likely capped by the higher 50-day SMA at 1.4077 unless sellers lose control of the medium-term trend.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.
USDEURGBPJPYCADAUDNZDCHFUSD-0.31%-0.35%-0.08%-0.39%-0.29%-0.59%-0.14%EUR0.31%-0.04%0.22%-0.10%0.02%-0.30%0.17%GBP0.35%0.04%0.28%-0.08%0.06%-0.24%0.22%JPY0.08%-0.22%-0.28%-0.30%-0.21%-0.54%-0.04%CAD0.39%0.10%0.08%0.30%0.10%-0.20%0.26%AUD0.29%-0.02%-0.06%0.21%-0.10%-0.30%0.16%NZD0.59%0.30%0.24%0.54%0.20%0.30%0.48%CHF0.14%-0.17%-0.22%0.04%-0.26%-0.16%-0.48%
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Robust Canadian economic data and broad U.S. dollar weakness outweighed falling crude oil prices, pushing USD/CAD down toward two-month lows Key upcoming catalysts include Wednesday's US CPI release and new 50% US tariffs on Canadian goods effective August 19, both pivotal for direction Holding U.S. dollars carries risks from Federal Reserve rate cuts, whereas Canadian dollar exposure remains vulnerable to falling energy prices and trade friction Oil prices have fallen notably in recent weeks due to changing dynamics in the Middle East and evolving supply expectations. Despite this, the Canadian dollar has strengthened against the US dollar more than anticipated, with USD/CAD trading around 1.393, a level not seen in approximately two months.
This divergence suggests that oil prices are not the sole driver of the Canadian dollar’s performance. Other factors are providing more substantial support for the Canadian currency in the current market conditions.
Oil Is Down, But That’s Not the Story Right Now WTI crude’s been on a bumpy ride lately. After hitting a late July high near $86.89, it fell to about $74.30 in early August, though it’s since found its footing in the upper $70s. This dip came as Middle East tensions eased, partly due to a U.S.-Iran memorandum that calmed fears about Strait of Hormuz disruptions. Record U.S. output and expected inventory surpluses also played a part.
Ordinarily, a drop like that would hurt the loonie. But the currency has mostly shrugged it off.
Several key macro factors are insulating the Loonie from the recent slide in oil prices. For one, Canada’s own economic data has given the currency a lot of support. Strong domestic job numbers and steady GDP growth have boosted confidence in the country’s economic health.
Interest rate differences still favor the US dollar, as the Federal Reserve’s policy rate is higher than the Bank of Canada’s 2.25% target. While the Fed remains cautious, commentary from Vantage Markets suggests the Bank of Canada’s policy rate has reassured investors, signaling that Canadian rates have stabilized.
What to Watch in the Coming Weeks A few things could quickly change this situation. For one, everyone will be watching Wednesday’s US CPI release. A hot inflation number there could bring back Fed rate-hike expectations and give the dollar another boost.
Additionally, new U.S. tariffs of 50% on approximately $20 billion of Canadian goods are set to take effect on August 19. Unlike previous measures, these tariffs will apply even to goods that typically receive preferential treatment under the CUSMA trade agreement.
This presents a significant challenge for Canadian exporters and could exert downward pressure on the Canadian dollar once the tariffs are fully implemented.
Furthermore, the Bank of Canada’s interest rate decision on September 2 is approaching. The consensus among most analysts is that the bank will maintain its current rate of 2.25% as it continues to assess the impact of the tariffs.
Risks in Holding Either Currency If you hold Canadian dollars, you’re exposed to how commodity prices move. If oil prices fall for a while, it would hurt export earnings and the Canadian dollar. Trade uncertainty or weak Canadian economic news could also undo recent gains.
On the other side, the US dollar remains susceptible to weaker US economic indicators or a shift in Federal Reserve policy towards a more accommodative stance. Geopolitical risks can sometimes support the dollar as a safe-haven asset, while at other times, they can boost oil prices and the Canadian dollar.
Speculative positioning adds another wrinkle. Traders have been betting against the Canadian dollar more heavily than almost any other major currency. This means if something good happens for Canada, those bets could quickly unwind, causing sharp, exaggerated moves in the Canadian dollar in either direction.
Why has the Canadian dollar gained despite softer oil periods?
Stronger Canadian July jobs data, lower unemployment and relative US dollar softness have outweighed oil weakness in supporting the loonie recently.
What’s the risk of holding US dollars right now?
A weakening labor market and softer inflation data could deepen Fed rate-cut expectations, extending recent dollar weakness against major currencies including CAD.
What is the main risk for the Canadian dollar?
A sustained decline in oil prices, weaker domestic data or escalated trade tensions could reverse recent CAD strength against the US dollar.
USD/CAD trades on the back foot on Monday even as the US Dollar (USD) regains some ground after weakening last week following softer-than-expected US Nonfarm Payrolls (NFP) data. Attention now turns to Wednesday’s US Consumer Price Index (CPI) report. At the time of writing, the pair trades around 1.3932, near its lowest level in two months.
The Canadian Dollar (CAD) draws support from stronger-than-expected domestic labour data and rising Oil prices. West Texas Intermediate (WTI) trades around $80.37 per barrel, up 5.20% on the day.
USD/CAD dip below 1.40 puts focus on US CPI and Fed pricingAccording to TD Securities, the latest payrolls data “broke USD/CAD below 1.40,” as the sharp reaction to the contrasting US and Canadian labour market outcomes underscored that “the market remains focused on both central-bank divergence and Canada's domestic outlook.” On the Canadian side, the bank notes that “recent developments in the Canadian economy have evolved broadly in line with our forecasts,” and that while the data surprise is “briefly pushing USD/CAD below the 1.40 support level,” they “think the bearish USD momentum may not sustain unless US CPI also surprises lower to allow market to price out near-term Fed rate hiking odds.”
From a technical perspective, USD/CAD has formed a series of lower highs and lower lows since briefly rising above 1.4200 in late June. The pair holds below the 1.4000 psychological mark and the 50-day Simple Moving Average (SMA) at 1.4075, keeping the near-term bias tilted to the downside.
Momentum indicators also favour sellers. The Relative Strength Index (RSI) sits near 33, approaching oversold territory, while the Moving Average Convergence Divergence (MACD) indicator stays in negative territory.
On the downside, the 100-day SMA near 1.3916 offers initial support, followed by the 200-day SMA around 1.3853. A decisive break below the latter could open the door to a deeper decline.
On the topside, the 1.4000 psychological mark acts as immediate resistance, followed by the 50-day SMA at 1.4075. A recovery above this moving average would ease the bearish pressure.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Canadian Dollar Price Today The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the strongest against the Japanese Yen.
USDEURGBPJPYCADAUDNZDCHFUSD0.10%-0.24%0.72%-0.06%0.05%0.10%0.20%EUR-0.10%-0.33%0.61%-0.17%-0.04%-0.00%0.10%GBP0.24%0.33%0.97%0.17%0.31%0.33%0.44%JPY-0.72%-0.61%-0.97%-0.80%-0.69%-0.68%-0.52%CAD0.06%0.17%-0.17%0.80%0.06%0.18%0.25%AUD-0.05%0.04%-0.31%0.69%-0.06%0.02%0.15%NZD-0.10%0.00%-0.33%0.68%-0.18%-0.02%0.11%CHF-0.20%-0.10%-0.44%0.52%-0.25%-0.15%-0.11% The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).
USD/CAD klesl na nejnižší úroveň od začátku června po slabých amerických mzdových datech a silných datech z Kanady. Trh zároveň snižuje sázky na další zvýšení sazeb Fedu.
USD/CAD opens the new week trading at its lowest level since early June, breaking lower on Friday following the release of a vastly divergent set of labour market data for July, continuing a trend seen across other economic figures over recent months.
A tale of two jobs reports That trend was on full display again last Friday, with a soggy US payrolls report sitting in stark contrast to a blowout set of figures north of the border. US non-farm payrolls fell by 23,000 in July against expectations for an 80,000 increase, with May and June also revised down by a combined 103,000. While the unemployment rate fell to 4.1%, average hourly earnings rose just 0.1% on the month, providing little evidence that labour market conditions are bolstering domestic inflation pressures.
Canada’s report could hardly have been more different. Employment jumped by 75,100 against expectations for an increase of just 16,500, with gains split almost evenly between full-time and part-time positions. The unemployment rate also fell to 6.4%, its lowest level in two years. But relativities matter. Despite the improvement, there is still considerable slack in the Canadian labour market, while annual wage growth slowed to 3.0% from 3.7%. That suggests a meaningful reacceleration in labour-driven inflation looks unlikely near-term, especially with inflation pressures already soft, questioning the need for the Bank of Canada to hike rates by year-end.
There are also reasons to be cautious about reading too much into the US payrolls miss. July has developed a habit of producing sizeable downside surprises in recent years, with seasonal adjustment around the summer months a possible factor. Much of the weakness was also concentrated in local government education, while private payrolls increased by 30,000. That doesn’t make the report strong, but it does raise questions about how much signal should be taken from the headline decline alone.
USD/CAD keeps one eye on Fed pricing
Source: TradingView, FOREX.com
When it comes to USD/CAD, there hasn’t been an obvious underlying driver of the recent move, at least based on the various relationships I’ve looked at. But one that has been reasonably consistent is the relationship between the pair and market pricing for the Fed out to its June meeting next year. As the amount of tightening priced over that period has been whittled away, USD/CAD has moved lower.
That puts plenty of emphasis on anything capable of shifting Fed pricing from here. With the Canadian calendar very quiet this week, the main event risk comes from the US, with CPI and PPI due on Wednesday and Thursday respectively. They are the key scheduled risk events for USD/CAD traders, alongside any fresh developments on the geopolitical front.
Interestingly, energy prices have shown little consistent relationship with USD/CAD over short, medium or longer-term periods, perhaps reflecting the fact that both the US and Canada are major energy producers.
CPI and PPI to test the Fed hike case
Source: LSEG Workstation, FOREX.com
A relatively soft set of inflation figures is expected this week. Core CPI is seen rising just 0.2% on the month, which would see the annual rate slow to 2.5%. That is still above the Fed’s target and CPI is not its preferred inflation measure, but it would still be a tepid outcome given how strongly the US economy has performed relative to much of the rest of the world.
The same applies to upstream inflationary pressures. Headline PPI is expected to rise just 0.1% on the month and 3.4% over the year, with the annual rate seen slowing slightly. And looking at Citi’s US inflation surprise index above, even with the supply-driven energy shocks of recent years and some inflationary pressure stemming from the AI buildout, there have been relatively few meaningful upside surprises. By and large, inflation outcomes have either been close to expectations or undershot them.
So while the Fed is still talking about the risk of further rate hikes and markets continue to mildly favour a move in September, expectations for this week’s inflation reports are benign. Could the data come in ugly? Absolutely. But based on the trend seen in recent years, repeated upside inflation surprises have not been a feature.
Canada’s data momentum continues to improve
Source: LSEG Workstation, FOREX.com
It’s not just US inflation prints that have tended to undershoot or come in close to expectations recently, but broader economic data as well. Citi’s Economic Surprise Index measures how economic releases print relative to market expectations. While the US economy is still performing strongly in absolute terms, the data have become less likely to beat expectations over recent weeks, with the index falling to its lowest level since early May.
At the same time, Canadian data have been heating up, with its surprise index moving sharply higher and overtaking the US measure for the first time since earlier this year. That relative shift has been mirrored in USD/CAD over the same period, with the pair breaking lower as the data backdrop has moved in Canada’s favour.
USD/CAD trend turns lower
Source: TradingView
From a technical perspective, USD/CAD has established a new downtrend, highlighted by a string of lower highs and lower lows. Friday’s jobs reports delivered a break below 1.3991, with the pair now sitting just above the 100-day simple moving average.
The message from the oscillators also favours selling into strength. RSI (14) continues to trend lower, setting lower highs and lower lows, and is not yet oversold. MACD has also staged a bearish crossover and slipped into negative territory, confirming that downside momentum continues to build.
The question is whether traders want to get short at current levels after the retracement already seen, especially with question marks around the signal from the US payrolls report and major inflation data looming. There are also signs that the geopolitical situation in the Gulf is deteriorating again, which could favour broader US dollar strength. With the big dollar off its highs, that raises the risk of a mild retracement in USD/CAD ahead of Wednesday’s CPI report.
In the interim, 1.3950 is worth watching. The pair has spent plenty of time either side of it this year, making it a useful near-term pivot for those looking at short-term setups. My preference would be to see a move back towards former support at 1.3991, and then watch how the price behaves. A clear rejection would suggest that former support has flipped to resistance, creating a more appealing setup for shorts, allowing for a tight stop to be placed above.
On the downside, the 100-day moving average is the first target, followed by 1.3870, which has acted as both support and resistance on several occasions this year. The 200-day moving average sits just beneath, making that broader area an obvious target zone for shorts. Beyond there, 1.3775 is a minor support level, before a much more important zone kicks in around 1.3710. It acted as resistance earlier this year and lines up with the 78.6% Fib retracement of the September 2024 to February 2025 bull move.
On the topside, a break back above 1.3991 into the low 1.40s would start to question the bearish bias, opening the risk of a retest of the minor downtrend from the July highs, currently found around 1.4070. That also lines up with the 50-day simple moving average, which the price has respected frequently in recent months. A clean break above that downtrend would break the sequence of lower highs and raise the risk of a resumption of the prior bullish trend.
USD/CAD climbed toward weekly highs as falling oil prices weakened the Canadian dollar despite strong domestic trade data. Canada's trade surplus reached a four-year high, but the positive economic data was overshadowed by the sharp decline in crude oil prices. Markets are reassessing Federal Reserve expectations, limiting gains in the US dollar after weaker-than-expected US economic data. USD/CAD rises as oil prices pressure the Canadian dollar The USD/CAD exchange rate extended its gains on Wednesday, climbing toward the 1.4080 level as another sharp decline in oil prices continued to pressure the Canadian dollar.
The move came despite encouraging economic data from Canada, where the country’s merchandise trade surplus expanded to its highest level in four years during June. Under normal market conditions, stronger trade figures would support the loonie. However, investors remained focused on the collapse in crude oil prices, which has become the dominant driver of the Canadian currency this week.
Canada is one of the world’s largest crude exporters, meaning movements in oil prices often have a direct impact on the value of the Canadian dollar. With Brent crude slipping below $80 per barrel as hopes for a diplomatic breakthrough between the United States and Iran improved, traders reduced exposure to the loonie in anticipation of weaker export revenues.
Lower oil prices offset stronger Canadian economic data The Canadian dollar struggled to capitalize on stronger-than-expected domestic economic data as falling crude oil prices remained the dominant driver of market sentiment. Canada reported a merchandise trade surplus that climbed to a four-year high in June, reflecting resilient exports and healthy external demand. Under normal circumstances, such data would provide support for the loonie by reinforcing confidence in the country’s economic outlook.
However, investors largely overlooked the upbeat trade figures as oil prices extended their recent decline. Brent crude slipped below $80 per barrel, marking its lowest level in several weeks, after growing optimism that diplomatic negotiations between the United States and Iran could ease tensions in the Middle East and reduce the risk of supply disruptions. Expectations that global oil supplies could stabilize prompted traders to unwind part of this year’s geopolitical risk premium.
Because crude oil is Canada’s largest export, movements in energy prices have a significant impact on the country’s trade balance, corporate earnings and economic growth prospects. The latest decline in oil prices therefore outweighed the positive impact of Canada’s stronger trade data, leaving the loonie under pressure as investors continued to favor the US dollar.
Softer US data caps US dollar gains While USD/CAD continued to move higher, gains in the US dollar remained limited as investors reassessed the outlook for Federal Reserve policy following a fresh batch of weaker-than-expected US economic data. The greenback initially found support from broad risk sentiment but struggled to build sustained momentum as markets questioned whether the Fed would have enough justification to continue tightening monetary policy.
Recent economic releases painted a mixed picture of the US economy. JOLTS job openings fell by more than economists had anticipated, suggesting labor demand is beginning to cool after months of resilience. Meanwhile, factory orders unexpectedly declined, pointing to softer business investment and moderating manufacturing activity. Together, the data reinforced expectations that economic momentum is slowing, reducing pressure on the Fed to raise interest rates aggressively in the near term.
As a result, traders scaled back expectations for another interest rate hike, with market-implied odds of a September increase easing from the previous session. Lower rate expectations tend to weigh on the US dollar by narrowing its interest-rate advantage over other major currencies.
Despite this, USD/CAD remained supported because weakness in the Canadian dollar proved more significant than softness in the greenback. Falling crude oil prices continued to undermine the loonie, allowing the pair to edge higher even as US dollar gains were capped by expectations of a less hawkish Federal Reserve.
USD/CAD outlook The USD/CAD outlook remains cautiously bullish while the pair trades above the psychological 1.4000 support level. Buyers are now testing resistance around 1.4090, a key technical barrier that has capped recent advances. A decisive breakout above this level could expose 1.4125, with the yearly high near 1.4250 becoming the next major upside target.
However, if oil prices recover or expectations for further Federal Reserve tightening continue to fade, the Canadian dollar could regain some ground, potentially pulling USD/CAD back toward 1.4000.
Why is USD/CAD rising today?
USD/CAD is rising mainly because falling oil prices are weakening the Canadian dollar, while the US dollar remains relatively stable despite softer US economic data.
What is the next key level for USD/CAD?
The immediate resistance level is around 1.4090. A sustained move above this level could open the door for a test of 1.4125, followed by the 2026 highs near 1.4250.
Why do oil prices affect the Canadian dollar?
Canada is a major oil exporter. Lower crude prices reduce export revenues and typically weaken the Canadian dollar, while higher oil prices generally support the currency.
Analysts at Scotiabank expect renewed pressure on USD/CAD after its July decline, with a break below 1.4000 opening the way towards 1.3981 and the upper 1.39s. The US Dollar to Canadian Dollar exchange rate ended July near 1.4015 after falling 1.36% over the month.
USD/CAD opened July around 1.4208 and reached a monthly high close to 1.4239 before retreating to a low near 1.3992. The pair remains 2.1% higher for 2026, having traded between approximately 1.3482 and 1.4248 since the start of the year.
Scotiabank says the Canadian Dollar has benefited from the broader deterioration in US Dollar sentiment following the Federal Reserve meeting, although progress through the 1.4000 area has so far proved difficult.
Short-term US-Canada interest-rate spreads narrowed modestly after the FOMC decision, providing some support for the Loonie. The bank cautions, however, that the remaining yield gap is still wide enough to restrain a more substantial Canadian Dollar advance.
The latest weekly close may be more significant. Scotiabank believes the move suggests that the rebound in USD/CAD from its mid-July low is beginning to reverse.
The pair has moved decisively below its 40-day moving average, which Scotiabank places at 1.4104. The bank now expects minor recoveries towards 1.4100 to encounter firm resistance.
USD/CAD tested the 1.4000 region during the final sessions of July but failed to reach the 38.2% retracement of the May-June rally at 1.3981.
According to Scotiabank, “a low close on the week suggests the USD rebound from mid-July is reversing and more pressure is likely on the upper 1.39s in the days ahead.”
The one-month chart supports the softer technical picture. USD/CAD has fallen below its declining 20-day moving average and closed close to the bottom of July’s range.
The broader year-to-date chart is less conclusive. The pair remains above its rising 50-day average and is still well above the January low, reflecting the scale of the Dollar rally during May and June.
Canada’s domestic data provide the next potential catalyst. May industry-level GDP is expected to rise 0.2% on the month and 1.4% from a year earlier. A stronger reading could help the Canadian Dollar force a clearer break below 1.4000.
Scotiabank’s short-term assessment is bearish, with 1.3981 marking the immediate downside target and the upper 1.39s likely to come under further pressure. Resistance around 1.4100 should now limit any near-term USD recovery.
Canadian Dollar Prices: This Week USDEURGBPJPYCADAUDNZDCHFUSD -1.37%-1.17%-3.91%-0.57%-0.61%-1.66%-1.35%EUR+1.39% +0.21%-2.57%+0.82%+0.78%-0.29%+0.03%GBP+1.18%-0.21% -2.77%+0.61%+0.57%-0.50%-0.18%JPY+4.07%+2.64%+2.85% +3.47%+3.43%+2.34%+2.66%CAD+0.57%-0.81%-0.60%-3.36% -0.04%-1.10%-0.78%AUD+0.61%-0.77%-0.56%-3.32%+0.04% -1.06%-0.74%NZD+1.69%+0.29%+0.50%-2.28%+1.11%+1.07% +0.32%CHF+1.37%-0.03%+0.18%-2.59%+0.79%+0.75%-0.32% The FX heat map compares how Canadian Dollar (CAD) has performed against a basket of major currencies over the past week. The largest move was against the Japanese Yen, where Canadian Dollar recorded its sharpest decline. Data comparing prices today (01/08/2026 12:20 UTC) and daily close on 25/07/2026.
To read the table, choose the base currency from the left-hand column and then move across to the quote currency along the top row. For example, the GBP row and USD column shows the weekly percentage move in GBP/USD.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
The USD/CAD pair seesaws between tepid gains/minor losses through the early European session on Friday, consolidating its recent losses to the lowest level since June 17, touched the previous day. However, a combination of supporting factors assists spot prices in holding above the 1.4000 psychological mark.
The US Dollar (USD) regains some positive traction as inflation risks stemming from volatile energy prices keep inflation risks and the US Federal Reserve (Fed) rate hike bets in play. Furthermore, retreating crude oil prices undermine the commodity-linked Loonie and act as a tailwind for the USD/CAD pair. The lack of any meaningful buyers, however, warrants some caution before confirming that a three-day-old downtrend has run its course.
From a technical perspective, this week's breakdown below the 200-period Simple Moving Average (SMA) on the 4-hour chart was seen as a key trigger for bearish traders. Adding to this, the Moving Average Convergence Divergence (MACD) sits below zero with the line in negative territory, while the Relative Strength Index (RSI) hovers near 37. Momentum indicators hint that downside momentum remains dominant despite the proximity of initial support.
However, it will be prudent to wait for some follow-through selling and acceptance below the 1.4000 mark before positioning for deeper losses. The USD/CAD pair might then weaken to the 38.2% Fibo. retracement around 1.3979, which is followed by deeper retracement levels at 1.3897 and 1.3814, where the 50.0% and 61.8% Fibo levels could slow further losses.
On the topside, any recovery would first need to overcome resistance at the 23.6% retracement near 1.4082, with the 200-period SMA at 1.4130 capping the broader upside. Failure to clear the said hurdle will reinforce the prevailing bearish structure while the USD/CAD pair remains below it.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
USD/CAD 4-hour chart
Canadian Dollar Price This week The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies this week. Canadian Dollar was the strongest against the US Dollar.
USDEURGBPJPYCADAUDNZDCHFUSD-1.00%-0.81%-1.96%-0.48%-0.39%-1.13%-1.03%EUR1.00%0.17%-0.98%0.53%0.62%-0.13%-0.04%GBP0.81%-0.17%-1.29%0.35%0.44%-0.30%-0.21%JPY1.96%0.98%1.29%1.54%1.64%0.88%0.89%CAD0.48%-0.53%-0.35%-1.54%0.06%-0.65%-0.56%AUD0.39%-0.62%-0.44%-1.64%-0.06%-0.74%-0.65%NZD1.13%0.13%0.30%-0.88%0.65%0.74%0.09%CHF1.03%0.04%0.21%-0.89%0.56%0.65%-0.09% The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).
Despite the Canadian dollar’s recovery attempts in previous weeks, a renewed loss of strength against the U.S. dollar is becoming evident. This is reflected in USD/CAD, which has gained more than 0.2% over the last 2 trading sessions, including the close of last week and the first session of this week.
For now, buying pressure remains stable, in a context where the behavior of U.S. bonds and expectations around the Federal Reserve continue to limit a consistent recovery in the CAD. This is also being reinforced by uncertainty around possible trade tariffs on Canada, a factor that could remain relevant for the pair over the next few trading sessions.
Is the Federal Reserve still relevant? When analyzing USD/CAD expectations, it is important to consider the central bank dynamic in both the United States and Canada. On one hand, the Bank of Canada maintains an outlook of unchanged rates near 2.25%. On the other hand, the United States continues to hold a higher reference rate at 3.75%.
What is relevant is that the Federal Reserve’s interest rate decision is expected this week, and market probabilities have started to gain importance. The event could reinforce expectations of a more aggressive monetary policy stance in the United States and widen the rate differential with Canada, favoring the relative appeal of USD-denominated investments.
For this week’s decision, the market assigns a probability close to 62.00% that there will be no change in interest rates. However, this probability was close to 83% one week ago, while the probability of a possible hike at the July 29 decision now stands near 38%.
In addition, for the September 16 meeting, the probability remains above 50% that the United States could raise interest rates toward a new area close to 4.00%.
Source: CMEGROUP
Source: CMEGROUP
With this in mind, and unlike the more neutral outlook from the Bank of Canada, the market is starting to consider a potentially more aggressive Federal Reserve over the coming months. This possibility could be confirmed by this week’s decision and continue to support the relative appeal of USD-denominated assets.
This scenario also helps sustain strength in the U.S. 10-year Treasury market. Now, these securities maintain a yield near the upper 4.6% area, around 2026 highs, representing a robust return for one of the safest markets in the world.
Source: TradingEconomics
Therefore, the situation remains complicated for the Canadian dollar. If the Bank of Canada maintains a neutral stance and the market continues to anticipate a more aggressive Fed, USD-denominated investments could preserve a relative advantage. This would make a clearer recovery in the CAD more difficult and could continue to support buying pressure in USD/CAD over the next few sessions.
Does the tariff threat remain in place? So far, the threat of a 50% tariff on Canadian goods imposed by the United States last week remains relevant. The latest update is that Canada has not responded immediately with retaliatory measures, as Mark Carney announced that the country is intensifying negotiations with the United States before the tariffs come into effect.
However, no major progress has been seen yet that would reduce this threat in the short term. Trade uncertainty remains elevated, especially because the goods directly affected are estimated to represent nearly 28 billion Canadian dollars in exports. This could significantly affect Canadian trade and confidence around investments in Canada.
For this reason, the tariff issue could continue to weigh on the Canadian dollar. If no solid negotiations are seen that remove the threat of new tariffs, the appeal of the CAD could remain limited, and USD/CAD could maintain relevant buying pressure over the next few trading sessions.
Technical forecast for USD/CAD
Source: StoneX, Tradingview
Lack of direction begins to become evident: Over the last few weeks, USD/CAD has started to show a phase of neutrality on the chart, with most movements taking place between an upper area near 1.42132 and a lower area around 1.39968. For now, price continues to move within these levels. If it fails to break consistently out of this possible range, indecision could continue to gain relevance in the short term.
RSI: Now, the RSI remains close to the neutral 50 level and shows important flattening. This reflects a balance between buying and selling impulses over the last few sessions. If this behavior continues, the indicator could continue to highlight a relevant neutral phase over the next few sessions.
MACD: The MACD also maintains a histogram close to the neutral 0 level, suggesting balance in the strength of short-term moving averages. This reading reinforces the possibility that the indecision phase could remain important for USD/CAD over the next few sessions.
Key levels:
1.42132 – Relevant resistance: This area corresponds to 2026 highs and remains the main bullish barrier on the chart. Price movements toward this level could reactivate a buying bias and open room for a possible recovery of the bullish trend line that was relevant in previous weeks.
1.40907 – Near-term barrier: This area corresponds to the most relevant 23.6% Fibonacci level on the chart. Price movements that fail to move consistently away from this level could continue to highlight an important neutral phase and even open room for a more relevant short-term sideways range.
1.39968 – Crucial support: This relevant bearish barrier corresponds to the 38.2% Fibonacci retracement and also aligns with the 50-period simple moving average. Price movements below this level could reaffirm a more consistent selling bias and open room for a possible short-term bearish trend line over the next few sessions.
Written by Julian Pineda, CFA, CMT – Market Analyst
USD/CAD klesl pod 1,4100 na zhruba 1,4080, protože rostoucí ceny ropy a slabší dolar podpořily kanadský dolar. Nová americká 50% cla na vybrané kanadské zboží ale dál drží pár pod tlakem.
Rising crude oil prices and a weakening greenback pushed USD/CAD back below 1.4100, threatening a return to its July downward channel Central bank divergence remains a risk, as a cautious Bank of Canada (BoC) and hawkish Federal Reserve could limit further loonie gains The Bank of Canada’s steady policy rate keeps interest rate differentials tilted in favor of greenback dip-buyers on deeper pullbacks The US dollar briefly halted the Canadian dollar’s recent climb earlier this week. But it started falling again yesterday and still looks weak today. Now trading below 1.4100, around 1.4080, investors wonder if USD/CAD will return to the steady decline it had between late June and mid-July.
What Broke the Downtrend The brief pause in the downtrend had a clear cause. On Monday, the US administration announced new 50% tariffs on various Canadian goods, including wine, dairy, and cement. This action was stated as a response to what the US described as discriminatory practices against American products in Canada.
Canadian Prime Minister Mark Carney called this the latest in a series of unilateral US trade actions. He said Canada had “merely matched” prior US measures. Headlines like that usually hit the loonie first and hardest, which explains why the dollar strengthened Monday and Tuesday.
What Is Driving the Loonie’s Rebound? A significant increase in global crude oil prices is the primary driver behind the Canadian dollar’s resurgence. As a major exporter of commodities, Canada benefits directly from rising crude prices. Oil prices have reached new multi-week highs, which has helped to offset recent domestic challenges and provide strong fundamental support for the Canadian dollar.
Potential Risks Beneath the Surface Despite the current trend, a return to a consistent downtrend is not guaranteed. The tariffs announced on Monday will take effect in 30 days. If trade tensions escalate further before then, sentiment towards Canadian assets could shift negatively, irrespective of oil prices or interest rate movements.
While the current trend favors a stronger Canadian dollar, underlying risks require careful assessment. Uncertainties surrounding the USMCA trade agreement renewal and potential tariff discussions remain significant factors that could strengthen the US dollar if tensions increase.
Market expectations indicate that the Bank of Canada (BoC) might maintain a supportive monetary policy stance, influenced by recent lower domestic consumer price index (CPI) figures. In contrast, persistent US inflation data suggests the Federal Reserve is likely to continue its restrictive monetary policy for a longer period.
Investors should consider USD/CAD with a balanced view. Those expecting further gains in the Canadian dollar might explore strategies that leverage CAD strength, such as hedging US dollar exposure or investing in Canadian assets sensitive to commodity prices.
Effective risk management remains crucial. Diversification and close attention to central bank statements, oil market developments, and trade news will be essential for navigating market fluctuations. Adopting a flexible approach that adapts to evolving data, rather than making large directional bets, is likely to better serve long-term investment goals.
Is USD/CAD returning to its prior downward channel?
The recent weakness in the US dollar suggests a potential return to the late June to mid-July downtrend if current momentum continues.
What risks could impact USD/CAD trajectory?
Trade tensions related to the USMCA, geopolitical shocks in the energy sector, and differing monetary policies between the Federal Reserve and the Bank of Canada present notable risks of upward movement for the pair.
How do central bank interest rate expectations affect the USD/CAD outlook?
A potentially cautious Bank of Canada alongside a hawkish Federal Reserve could limit severe downside losses for USD/CAD.
USD/CAD se drží poblíž 1,4100, protože poptávka po bezpečném dolaru převažuje nad podporou kanadského dolaru z vyšších cen ropy. Trh sleduje rezistenci 1,4115.
USD/CAD held near 1.4100 after extending its recovery, with traders watching the key 1.4115 resistance level. Safe-haven demand for the US dollar continues to outweigh support for the Canadian dollar from higher crude oil prices. A break above 1.4115 could strengthen bullish momentum, while oil prices and US economic data remain the next major catalysts. The USD/CAD exchange rate traded around 1.4101 on Tuesday after recovering steadily over the past several sessions, as renewed demand for the US dollar continued to offset the Canadian dollar’s traditional support from rising crude oil prices.
The pair has advanced despite Brent crude remaining above $90 per barrel, highlighting how geopolitical uncertainty and expectations for higher US interest rates have become the dominant drivers of currency markets.
Investors are now watching whether USD/CAD can break above 1.4115, a level that could determine whether the pair resumes its broader uptrend.
Why Is USD/CAD Rising Today? The US dollar has regained strength as investors continue to favour safe-haven assets amid escalating tensions between the United States and Iran.
The conflict has pushed oil prices sharply higher, raising concerns that inflation could remain elevated and encouraging expectations that the Federal Reserve may keep interest rates restrictive for longer.
Those expectations have supported US Treasury yields and increased demand for the dollar across the forex market.
Ordinarily, rising oil prices benefit the Canadian dollar because Canada is one of the world’s largest crude exporters. However, the current geopolitical environment has strengthened the US dollar by an even greater margin, allowing USD/CAD to continue climbing despite favourable conditions for the loonie.
How Do Higher Oil Prices Affect USD/CAD? Crude oil remains one of the most important drivers of the Canadian dollar.
When oil prices rise, Canada’s export revenues typically increase, improving the country’s trade balance and supporting the value of the Canadian dollar.
This week, however, that relationship has weakened.
Brent crude has remained above $90 per barrel after threats to shipping through the Strait of Hormuz raised concerns over global energy supplies. Instead of boosting the Canadian dollar, the oil rally has primarily fuelled inflation concerns, strengthening demand for the US dollar and limiting gains for commodity-linked currencies.
As long as geopolitical risks continue driving oil prices higher, the Canadian dollar may struggle to fully benefit from stronger energy markets.
Will USD/CAD Break Above 1.4115? The 1.4115 level has become the key technical hurdle for USD/CAD. ActionForex notes that a decisive move above this resistance would confirm that the recent pullback from 1.4247 has likely ended and increase the probability of another test of that July high.
Conversely, failure to break above 1.4115 could trigger short-term profit-taking after the pair’s recent rally. For now, the broader outlook remains constructive while the pair continues trading comfortably above the 1.3954 support area.
USD/CAD Outlook The short-term USD/CAD outlook remains tilted to the upside while the pair trades just below the key 1.4115 resistance level.
Although elevated oil prices would normally strengthen the Canadian dollar, safe-haven demand for the US dollar and expectations that the Federal Reserve could keep interest rates higher for longer continue to dominate market sentiment.
Whether USD/CAD extends its recovery will likely depend on upcoming US economic data, developments in the Middle East and the direction of crude oil prices. A convincing move above 1.4115 would strengthen the case for another attempt at 1.4247, while renewed strength in the Canadian dollar could limit further gains if oil prices continue climbing.
Why is USD/CAD rising today?
USD/CAD is rising as investors buy the US dollar amid geopolitical uncertainty and expectations that the Federal Reserve may keep interest rates higher for longer. Safe-haven demand has outweighed support for the Canadian dollar from stronger oil prices.
How do oil prices affect USD/CAD?
Higher oil prices usually strengthen the Canadian dollar because Canada is a major oil exporter. A stronger Canadian dollar typically pushes USD/CAD lower. However, during periods of heightened geopolitical risk, the US dollar can outperform despite rising crude prices.
Will USD/CAD break above 1.4115?
The 1.4115 level is the next key resistance for USD/CAD. A sustained break above this level could signal a continuation of the recent recovery and open the door for a retest of the 1.4247 high.
USD/CAD vzrostl poté, co Trump zavedl 50% cla na asi 20 miliard dolarů kanadského vývozu mimo rámec ochrany USMCA. Trh to vnímá jako další zásah pro kanadský dolar.
The latest US tariffs on Canadian goods may be relatively modest in size, but the market reaction suggests investors are focusing on something bigger than the immediate trade impact. USD/CAD advanced after US President Donald Trump signed three proclamations imposing 50% tariffs on about $20 billion of Canadian exports, including alcohol, dairy products, motor vehicles, cement, hockey equipment and electrical machinery. The measures will take effect in roughly 30 days and, notably, apply regardless of compliance with the US-Mexico-Canada Agreement (USMCA, known as CUSMA in Canada), while exempting energy, potash, critical minerals and products already subject to Section 232 duties.
The significance lies less in the sectors affected than in what the latest move says about US trade policy. Since early 2025, Washington has repeatedly expanded tariffs on Canadian goods using different legal authorities rather than relying on the framework established by USMCA. Each new measure reinforces the perception that the agreement is providing less practical protection against unilateral trade actions. As a result, markets are increasingly treating US-Canada trade friction as a structural issue rather than a series of isolated disputes, adding another headwind to Canada’s economic outlook just as uncertainty surrounding the formal USMCA review continues to build.
Canada’s response has so far stopped short of matching Washington’s escalation. Prime Minister Mark Carney reiterated his preference for negotiations and emphasized strengthening Canada’s domestic economy, while Ontario Premier Doug Ford urged Ottawa to retaliate “tariff for tariff, dollar for dollar.” Whether the federal government adopts a more confrontational stance will likely determine how far trade tensions escalate. For now, the new tariffs represent another obstacle for the Canadian Dollar, particularly if investors begin pricing a more prolonged drag on growth.
Technically, USD/CAD is also sending a constructive signal for Dollar bulls. The rebound from 1.4002 followed successful tests of both 55 D EMA (now at 1.4002) and 1.3965 cluster support (38.2% retracement of 1.3480 to 1.4247 at 1.3954), suggesting the decline from 1.4247 was corrective rather than the start of a broader reversal. Firm break above 1.4115 minor resistance would strengthen the case that the broader uptrend from the 2026 low at 1.3480 is resuming, bringing another challenge of the 1.4247 high into view.
ActionForex
ActionForex.com was set up back in 2004 with the aim to provide insightful analysis to forex traders, serving the trading community for two decades. We started providing only a daily and a mid-day report, now known as Action Insights. Gradually, we added a lot more in-house contents to the site. Technical Outlook section was expanded to cover more pairs. In addition to that, Top Movers, Heat Map, Pivot Point Charts and Pivot Meters, Action Bias and Volatility Charts, are tools used by traders from all over the world.
Kanadský dolar v pondělí oslabil po slabší inflaci a zprávě, že USA uvalí na kanadské produkty nová 50% cla. USD/CAD tak přidal 0,5 % a zaznamenal největší denní zisk za 23 seancí.
The Canadian dollar was the weakest-performing major currency on Monday after softer-than-expected inflation data reduced expectations of further Bank of Canada policy tightening. Cooling headline and core inflation diminished Canada's relative yield advantage, weighing on the Loonie despite the central bank leaving its policy rate unchanged at 2.25%. Separately, reports that the US and Iran had signed a memorandum aimed at ending the conflict weighed on oil prices, adding further pressure to the oil-sensitive Canadian dollar. The loonie then came under renewed selling late in the US session after Reuters reported that Washington would impose new 50% tariffs on Canadian products.
Source: LSEG
Trump's Tariffs Add to Pressure on the Canadian Dollar The proposed 50% tariffs on Canadian products add a fresh headwind for the loonie by threatening Canada's export outlook and economic growth. Slower growth could reinforce expectations that the Bank of Canada will keep interest rates on hold or even consider easing if the economic impact proves material, reducing the Canadian dollar's yield appeal relative to the US dollar. While the full scope and timing of the tariffs remain uncertain, the announcement was enough to fuel another leg higher in USD/CAD.
USD/CAD Technical Analysis: US Dollar vs Canadian Dollar USD/CAD posted its largest daily gain in 23 sessions, rising 0.5% after finding support at the 50-day EMA and the 1.40 handle, strongly suggesting a swing low may be in place, at least in the near term. It has been just under a month since USD/CAD peaked, and recent developments suggest the pair could extend its rebound towards the 2025 high at 1.4140.
The 1-hour chart shows support has emerged around the weekly pivot point for now, although the sharp momentum shift below ¥116 suggests bears may look to sell into minor pullbacks. A break below 115.31 would bring the 115.00 handle into focus, followed by a key support zone around 114.60 where the monthly and weekly pivot points converge.
Source: ICE, TradingView
CAD/JPY Technical Analysis: Canadian Dollar vs Japanese Yen While crude oil prices didn’t exactly roll over on Monday, they did form doji’s on the daily chart to show indecision. Given but WTI and brent crude have stalled around their respective resistance levels, it removes another pillar of support for CAD/JPY – which is leaving bearish reversal signals of its own.
CAD/JPY formed a notable bearish engulfing candle on Monday to mark its second worst day of the month. Given it formed around 1.16 after a solid bounce, the case for a pullback was arguably growing anyway.
The 1-hour chart shows support has been found around the weekly pivot point for now, though the sharp momentum shift below 116 suggests bears may be seeking to fade into minor pullbacks, A break below 115.31 brings the 115 handle, and tight support zone around 114.6 into focus comprising of the monthly and weekly pivot points.
USD/CAD Key Points Canadian inflation cooled more sharply than expected in June, easing concerns that the recent energy-driven increase was spreading across the broader economy. Headline CPI slowed to 2.8% y/y from 3.2% in May; Excluding gasoline, inflation held steady at 2.2% y/y. USD/CAD remains near a 1-month low, but a possible bullish engulfing candlestick pattern that would strengthen the argument for a near-term bottom.
A week after a similarly below-expectation report from the US, Canadian inflation cooled more sharply than expected in June, easing concerns that the recent energy-driven increase was spreading across the broader economy. Headline CPI slowed to 2.8% y/y from 3.2% in May, while prices fell -0.4% m/m. On a seasonally adjusted basis, CPI declined -0.1%.
The slowdown was largely driven by gasoline, which fell -10.2% from May as global oil prices retreated. Gasoline remained 20.5% more expensive than a year earlier, but that was well below May’s 33.2% increase. Excluding gasoline, inflation held steady at 2.2% y/y.
The underlying details were also encouraging. The Bank of Canada’s preferred CPI-trim and CPI-median measures eased to 1.8% and 1.9%, respectively, leaving their average below the 2% target. Grocery inflation remained relatively firm at 3.9%, while World Cup-related demand pushed accommodation and air travel prices sharply higher. However, those increases were concentrated rather than widespread and are likely to dissipate soon with the tournament wrapping up this weekend.
For the Bank of Canada, the report supports the view that higher energy costs have not generated significant second-round inflation yet. With economic growth beginning to recover, the most likely outcome remains an extended hold at 2.25%, assuming oil prices stabilize and core inflation stays contained, though energy volatility from the ongoing conflict in Iran could still have a spillover impact on Canada’s oil-dependent economy in the coming months.
Canadian Dollar Technical Analysis: USD/CAD Daily Chart
Source: Tradingview, StoneX
From a technical perspective, USD/CAD is bouncing from support at its 50-day EMA near 1.4025, helped along by this morning’s softer-than-anticipated Canadian data. The North American pair remains near a 1-month low, but the combination of a BOC in stasis and the potential for safe-haven demand for the US dollar amid the re-escalating Iranian conflict could boost the pair as we move through the week. Current price action is showing a possible bullish engulfing candlestick pattern that would strengthen the argument for a near-term bottom.
Looking ahead, previous-support-turned-resistance at 1.4130 is the next level of resistance to watch before the 1+ year highs in the low-1.4200s, whereas a break below the 50-day EMA near 1.4020 could target the 38.2% Fibonacci retracement of the May-July rally below 1.4000.
-- Written by Matt Weller, Global Head of Research
Check out Matt’s Daily Market Update videos on YouTube and be sure to follow Matt on Twitter: @MWellerFX
Commodity-linked currencies strengthened after US inflation data came in weaker than expected. The Consumer Price Index (CPI) slowed to 3.5% year-on-year in June, below the 3.8% forecast, while core inflation eased to 2.6% versus expectations of 2.8%. On a monthly basis, headline CPI unexpectedly fell by 0.4%, while core CPI was unchanged. The moderation in inflationary pressure increased expectations that the Federal Reserve may adopt a more accommodative policy stance, putting pressure on the US dollar and supporting both the Australian and Canadian dollars against the greenback.
However, despite the weaker US dollar, the next move in USD/CAD will largely depend on the Bank of Canada’s policy decision. Later today, the central bank will announce its interest rate decision, publish its updated Monetary Policy Report, and hold a press conference with the Governor. If policymakers maintain a cautiously hawkish tone on inflation, the Canadian dollar could receive additional support. Conversely, a more dovish message may limit CAD gains despite the broader weakness in the US dollar.
Market participants will also focus on the release of the US Producer Price Index (PPI), which will provide further insight into inflation trends following the softer CPI report. In addition, US crude oil inventory data could influence USD/CAD, as oil prices traditionally have a significant impact on the Canadian dollar.
AUD/USD The AUD/USD pair continues to develop the bullish engulfing reversal pattern. Yesterday, buyers managed to test the key resistance level around 0.7000. If the pair secures a sustained break above this level, the rally could extend towards the 0.7080–0.7130 area. The bullish scenario would be invalidated by a move below 0.6900.
Key events for AUD/USD:
Today at 14:00 (GMT+3): US MBA Mortgage Market Index Today at 15:30 (GMT+3): US Producer Price Index (PPI) Today at 15:45 (GMT+3): Speech by FOMC member John Williams
USD/CAD Following confirmation of the bearish tower top reversal pattern, selling pressure on USD/CAD intensified, reinforced by the weaker-than-expected US inflation data. As a result, the pair declined below 1.4100. Technical analysis suggests there is scope for a further move lower towards the 1.3960–1.4020 area. A decisive break back above 1.4120 could revive the bullish outlook.
Key events for USD/CAD:
Today at 16:45 (GMT+3): Bank of Canada interest rate decision Today at 17:30 (GMT+3): US Crude Oil Inventories Today at 17:30 (GMT+3): Bank of Canada press conference
Overall, the weaker US inflation report strengthened expectations of a more accommodative Federal Reserve, weighing on the US dollar and supporting commodity-linked currencies. However, the next moves in AUD/USD and USD/CAD will depend on upcoming economic data and the Bank of Canada’s policy guidance.
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USD/CAD klesl na téměř měsíční minimum a míří k důležitému supportu kolem 1,3965. Loonie podporuje slabší USD, vyšší ceny ropy a očekávání jestřábějšího tónu BoC.
By the time the Bank of Canada announces its policy decision today, the Canadian Dollar has already built a powerful foundation for further gains. USD/CAD has fallen to its lowest level in nearly a month, supported not by a single catalyst but by three reinforcing forces: a broad retreat in the US Dollar after softer inflation data, higher oil prices that strengthen Canada’s export outlook, and growing expectations that the Bank of Canada may sound more hawkish than markets anticipated only a week ago.
The first two drivers have already reshaped the currency outlook. June’s weaker-than-expected US CPI prompted investors to scale back Federal Reserve tightening expectations, weighing on the Dollar across major currency pairs. At the same time, Brent crude has surged above $86 as renewed US-Iran hostilities threaten energy supplies through the Strait of Hormuz. For Canada, rising oil prices are more than just a global inflation story—they improve the country’s terms of trade and typically provide direct support for the Canadian Dollar, helping explain why the Loonie has outperformed most of its peers following the inflation data.
The Bank of Canada now has an opportunity either to reinforce or challenge that momentum. Economists overwhelmingly expect a sixth consecutive hold at 2.25%, making the decision itself unlikely to surprise. The more important question is whether Governor Tiff Macklem adjusts his message in response to oil’s renewed surge. His previous characterization of policy as balancing weaker growth against energy-driven inflation was formed before Brent’s latest rally, meaning the Monetary Policy Report may already understate current inflation risks. Markets will therefore pay closer attention to Macklem’s live assessment than to the published projections.
That leaves the accompanying statement and Macklem’s press conference as the key market events. Investors will focus on whether the Governor continues to describe policy as a balanced dilemma or acknowledges that the renewed energy shock has tilted inflation risks higher. Any discussion of the ongoing CUSMA trade review will also be closely watched, as it remains an important downside risk to Canada’s growth outlook. Even without signaling an imminent rate increase, a modestly more hawkish tone could encourage markets to further increase expectations of tightening in early 2027, where pricing is already becoming increasingly balanced.
Technically, USD/CAD is approaching an important inflection point. While the decline from 1.4247 has accelerated, it is still viewed as a correction within the broader uptrend from 1.3480. Strong support is expected between former resistance at 1.3965 and 38.2% retracement of 1.3480 to 1.4247 at 1.3954. Break of 1.4159 minor resistance will indicae that the correction has completed.
However, a decisive break below 1.3954/65 would suggest the advance from 1.3480 has completed as a three-wave corrective rebound after failing near 61.8% retracement of 1.4791 to 1.3480 at 1.4290. Such a development would shift the near-term technical outlook decisively in favour of further Canadian Dollar strength.
ActionForex
ActionForex.com was set up back in 2004 with the aim to provide insightful analysis to forex traders, serving the trading community for two decades. We started providing only a daily and a mid-day report, now known as Action Insights. Gradually, we added a lot more in-house contents to the site. Technical Outlook section was expanded to cover more pairs. In addition to that, Top Movers, Heat Map, Pivot Point Charts and Pivot Meters, Action Bias and Volatility Charts, are tools used by traders from all over the world.
USD/CAD zůstává před kanadskými daty o zaměstnanosti v neutrálním až mírně býčím nastavení. Trh čeká na červnový přírůstek kolem 11,2 tisíce míst, hluboko pod květnovými 87,8 tisíce.
Since the final days of June, the Canadian dollar has been unable to build relevant strength against the U.S. dollar. Now, average USD/CAD movements remain close to 0.2% in the short term, showing a neutral bias that has become evident again in the behavior of both currencies.
For now, CAD has not managed to regain confidence ahead of the employment data release. An additional slowdown in this indicator could keep the Bank of Canada on a neutral policy path, limiting the support from higher rates and making it harder for the Canadian dollar to regain appeal in the short term.
In addition, new updates around the conflict in the Middle East could be key for USD strength. Together, these events could continue to highlight a phase of indecision, or even relevant buying pressure, around USD/CAD over the next few sessions.
What to expect from employment in Canada? Tomorrow’s session is expected to bring the release of Canada’s employment change data. So far, expectations point to a significant decline from the previous reading, with the creation of around 11.2 thousand jobs in June. This figure would come in well below the May reading, which stood near 87.8 thousand jobs created.
Looking at the broader behavior of employment in Canada over the last few months, the data shows a mixed dynamic, with consistent signs of weakness. May was the only month that managed to post a solid figure, but overall, employment data has shown fragility. This trend could be confirmed with tomorrow’s release, especially if the result comes in below expectations, as it would reaffirm a relevant labor market problem in Canada compared to other countries where the slowdown is not as significant.
Source: TradingEconomics
This outlook could be relevant for the Bank of Canada, as weaker employment, or even a reading below expectations, could reduce the need to raise the interest rate, which currently remains around 2.25%. This could lead the central bank to maintain a wait-and-see stance before considering meaningful changes to monetary policy.
In fact, so far, the probability table shows an 88% chance that the interest rate will remain unchanged at the July 15 decision. For the September decision, a probability above 70% has also started to emerge that this dynamic will persist.
Source: Bankofcanadaodds
The employment data release is key. If the report confirms a sharper-than-expected slowdown, expectations for a neutral monetary policy stance from the Bank of Canada could be reinforced over the coming months.
This would limit the appeal of rates in Canada, especially compared to a Federal Reserve that is still approaching scenarios of potential rate hikes. In this context, the differential against the 3.75% rate in the United States could continue to favor USD-denominated investments over those denominated in CAD.
For this reason, a significant decline in employment change could maintain a phase of indecision or even relevant buying pressure in USD/CAD over the next few sessions.
Does the Middle East matter? Another important event to consider is the situation in the Middle East. The latest updates have shown that the United States would be willing to sit down for negotiations, while Trump’s comments continue to point toward maintaining a diplomatic path.
However, an environment of confusion has developed, as during the last 2 sessions a new escalation of the conflict seemed inevitable amid fresh attacks. This has increased doubts over whether a potential peace agreement can take place in the short term.
In this scenario, the behavior of the U.S. dollar is key. The DXY index, which measures the dollar’s strength, showed a relevant increase above the 101-point area in previous sessions as new attacks returned. During the latest session, however, it weakened again amid the relative calm generated by additional comments from the United States.
Source: TradingEconomics
This point is important because, for months, the dollar has been considered a liquidity safe-haven currency during repeated escalations of the conflict. This could become relevant again if no concrete negotiations are seen in the short term.
In that scenario, additional safe-haven demand for the U.S. dollar could appear, making it harder for the Canadian dollar to recover ground in the short term. This could also open the door to relevant buying pressure around USD/CAD over the next few sessions.
Technical outlook for USD/CAD
Source: StoneX, Tradingview
Bullish trend continues to dominate: Since the first days of May, USD/CAD has maintained a relevant bullish trend line. This structure has marked an important buying bias, also reinforced by the bullish crossover of the 50-period moving average above the 200-period moving average, signaling a shift from a bearish structure to a more relevant bullish structure. For now, there is no bearish correction strong enough to put this technical pattern at risk, which is why it remains the most important structure to watch and could continue to dominate movements over the next few sessions.
RSI: The RSI remains above the 50 level, suggesting that buying momentum has remained relevant over the last 14 sessions. If the indicator continues to hold above the neutral area, this could continue to reflect an important buying bias over the next few sessions.
TRIX: The TRIX line maintains a bullish slope above its neutral zone, reinforcing the presence of buying strength in long-term exponential moving averages and highlighting the importance of a broad buying bias. However, the curve has also started to flatten steadily, which may be signaling exhaustion in buying strength. This could reflect a relevant phase of indecision over the next few sessions or a possible pause in the buying bias seen in previous weeks.
Key levels:
1.42604 – Relevant resistance: This important high has not been seen consistently since April 2025 and represents the main short-term bullish barrier. Moves toward this zone would reinforce the current buying bias and could open room for an extension of the bullish trend line over the next few sessions.
1.41982 – Near-term barrier: This is the most relevant neutral and retracement zone from recent trading sessions. Price movements too close to this level could highlight consistent neutrality and even open room for a possible short-term sideways range.
1.40813 – Crucial support: This bearish barrier coincides with the area marked by the 23.6% Fibonacci level. Price movements that begin to approach this level could end the bullish trend line and open room for a more dominant selling bias over the coming trading weeks.
Written by Julian Pineda, CFA, CMT – Market Analyst
