USD/CAD Holds steady as the US dollar weakens sharply and oil prices plunge

crypthub

about 4 hours ago

USD/CAD Stability Amid Dual Pressures

The USD/CAD pair is holding a tight range as US dollar weakness and plunging oil prices cancel each other out. The DXY has slipped for three sessions while Brent fell below key technical levels, removing its usual support for the loonie. Analysts note the classic 80% inverse oil‑CAD link is muted by the concurrent dollar softness, so both drivers must be watched separately.

Drivers Behind US Dollar Weakness

Dollar weakness is driven by cooler inflation data, boosting expectations of earlier Fed rate cuts, and by narrowing yield spreads versus Eurozone and German bonds. Stronger economic signals from major trading partners are also pulling capital away from the dollar. Traders now focus on the upcoming CPI release for the next directional cue.

Impact of Oil Prices and Outlook

Canada’s currency is hit by a 12% drop in WTI since February, caused by higher OPEC+ output, reserve sales and lower demand forecasts. Each $10‑barrel move typically shifts USD/CAD by about 3 cents, with current support at 1.3480 and resistance near 1.3600, while volatility stays low. The balance could tip either way, affecting cross‑border trade, import costs and consumer prices.