Canadian Dollar slips against stronger USD; oil strength caps losses ahead of BoC, Fed

1.4000 provides a base for a USD/CAD rebound. Mixed fundamental signals leave the recovery without firm bullish conviction.
Persistent USD demand lifts the pair, but stronger oil prices support the Loonie and limit the upside.
With Wednesday's much-anticipated BoC and Fed rate decisions approaching, traders also appear reluctant to commit.

1.4000 draws some dip-buying in USD/CAD on Tuesday. The pair recovers part of the previous day's modest decline near this psychological level as the US Dollar (USD) strengthens broadly. A renewed rise in crude oil, however, supports the commodity-linked Loonie and restricts the pair's advance. Traders remain focused on this week's major central bank events.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

Wednesday brings the Bank of Canada (BoC) decision, with markets betting on a 25-basis-point (bps) rate increase. The main focus, however, remains the conclusion of the two-day FOMC meeting. Investors will also examine Federal Reserve (Fed) Chair Kevin Warsh's remarks at the post-meeting press conference for further guidance on the policy outlook. His comments precede Thursday's key US releases: the Advance Q3 GDP report and the Personal Consumption Expenditures (PCE) Price Index. Together, these developments will be important drivers of USD price movements and could give USD/CAD meaningful direction.

For now, elevated energy prices are fuelling inflation concerns, leaving traders apparently convinced that the US central bank will increase borrowing costs again by year-end. The geopolitical risk premium also remains firmly in place as US-Iran talks stall and Saudi Arabia faces renewed attacks. This backdrop helps the safe-haven USD advance for a third consecutive day. Continued support for the dollar might, in turn, favour USD/CAD. Bearish traders therefore have reason for caution before positioning for further losses following the pair's recent rejection at 1.4300, reached earlier this month and its highest level since April 2025.

1-hour chart: USD/CAD

1.4070 EMA: Technical Outlook

Below the 200-period Exponential Moving Average (EMA) at 1.4070 on the 4-hour chart, USD/CAD retains a bearish short-term bias. A concentrated resistance zone also constrains price action, running from the 23.6% Fibonacci retracement at 1.4048 towards the EMA. Rallies remain vulnerable while the pair trades beneath this band.

Above that zone, resistance lies at the 38.2% retracement of 1.4097, then the 50.0% level of 1.4136 and the 61.8% retracement of 1.4176. The next barriers are 1.4232 and 1.4303. Initial support, meanwhile, sits near the Fibonacci anchor at 1.3969. A break below it would clear the path for a deeper correction within the broader bullish cycle framed by that structural low and the 1.4303 high.

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

Economic Data Release

BoC Rate Decision

At the conclusion of each of its eight scheduled annual meetings, the Bank of Canada (BoC) publishes its interest rate decision. An assessment that inflation will exceed target signals a hawkish stance: the BoC will increase rates to bring inflation down. Higher rates draw more foreign capital into Canada, making this bullish for the CAD. Conversely, a dovish assessment that inflation will slip below target will prompt the BoC to cut rates. The aim is to stimulate Canada's economy in the hope of returning inflation to target. Reduced foreign capital inflows make this bearish for the CAD.

View details.

Next publication: Wed 28 Oct 2026 13:45

Release frequency: No fixed schedule

Consensus forecast: 2.5%

Previous reading: 2.25%

Data source: Bank of Canada