Canadian Dollar falls as USD strength, Oil weakness bite

The Loonie registers losses of 0.40% on Tuesday as the US Dollar refreshes year-to-date (YTD) highs, while falling Oil prices weighed on the CAD, with USD/CAD trading above 1.4200 for the first time since April 2025.

USD/CAD breaks above 1.4200 Oil slide crushes Loonie

Sentiment turned sour, led by global tech shares, which plunged with no headline involved; yet there’s speculation that extremely high valuations and month-, quarter- and half-year-end flows could have been involved. Consequently, the risk-off environment bolstered the Greenback, which, according to the US Dollar Index (DXY), posted gains of over 0.36% at 101.36.

US data was positive; the S&P Global Manufacturing PMI in June rose to 55.7 from 55.1 in May, beating forecasts of 54.8. The report showed activity improved as companies front-loaded orders to avoid shortages and rising prices, driven by the US-Iran war energy shock.

In Canada, Bank of Canada Governor Tiff Macklem commented that the latest inflation report showed price increases concentrated in energy but noted that food inflation was a concern. Despite this, money markets do not expect a rate hike by the BoC until December, with odds at 57.4%.

On Monday, Canada's inflation data rose more than expected to 3.2% in May, but the core print was more subdued. This is sparked by Oil prices dropping, as WTI, the US crude Oil benchmark, loses over 1.40% on Tuesday, down to $73.00 per barrel.

On Wednesday, the Canadian docket will feature speeches by BoC officials Rogers and Breeden. In the US, housing data is expected, followed by Thursday’s busy schedule with the release of the Fed’s preferred inflation gauge, the Core PCE, GDP for Q1 2026 and Initial Jobless Claims for the week ending June 20.

USD/CAD Price Forecast: Technical outlook

In the daily chart, USD/CAD trades at 1.4211, extending a firm bullish bias as spot holds well above the clustered 50-, 100- and 200-day Simple Moving Averages (SMAs) grouped near 1.3805 and continues to respect the rising support trend line that has recently underpinned prices around 1.4158. The Relative Strength Index (14) at roughly 88 sits deep in overbought territory, suggesting upside momentum remains strong but also warns that the latest advance is stretched and vulnerable to a corrective pause if buying interest fades.

On the downside, initial support emerges at the rising trend line around 1.4158, where a pullback could attract fresh bids and keep the broader uptrend intact, with the SMA cluster near 1.3805 providing a more distant but significant structural floor if a deeper correction unfolds. With no clearly defined resistance levels immediately overhead from the available metrics, the pair’s upside appears open in the near term, though any further gains are likely to be increasingly challenged as overbought conditions persist.

(The technical analysis of this story was written with the help of an AI tool.)