USD/CAD gains after cooler CPI, eyes further upside
USD/CAD is edging higher after softer Canadian CPI reduced expectations for a Bank of Canada rate hike later this year. The pair is trying to turn up from an important support zone, although oil prices and momentum signals may still decide whether the move can extend.
Founder, Mott Capital Management
Cooler CPI has reduced Bank of Canada rate-hike odds
USD/CAD is rising slightly after Canada's March CPI report came in softer than expected, reducing some of the pressure on the Bank of Canada to tighten policy later this year. Headline CPI rose by 2.4% year on year against expectations of 2.5%, while core CPI climbed by 1.9% versus forecasts of 2.3%. That softer inflation mix has helped push down the odds of a Bank of Canada rate hike by December.
For FX markets, that matters because a lower expected policy path tends to weigh on the Canadian dollar relative to the US dollar. The move has not been dramatic yet, but it has been enough to interrupt the pair's recent downtrend and bring a key technical support region back into focus.
USD/CAD is trying to reverse its April downtrend
From a technical perspective, USD/CAD appears to have found support around the lower Bollinger Band and at an important level that has been in play since March. That support area has helped the pair stabilise after peaking at the beginning of April, and it now leaves the market watching whether a more durable reversal can take hold.
If support continues to hold and Bank of Canada rate-hike expectations fade further, USD/CAD may push towards 1.376, where the 10-day exponential moving average is currently sitting. That would be an early sign that the pair is building a broader recovery rather than simply bouncing within a weaker trend.
Source: TradingView, 20 April 2026
Oil prices and momentum may still decide the next move
The upside case is not settled yet. If the Canadian dollar regains strength and USD/CAD breaks below technical support around 1.369, the pair may slip towards the next support zone in the 1.34 to 1.35 region. That scenario remains possible because, even after bouncing off the lower Bollinger Band, the RSI is still hovering around 39, which suggests the pair is not yet oversold and could decline further.
Oil prices remain an important secondary driver because the Canadian dollar is still highly sensitive to moves in the energy complex. If oil prices begin to fall again while expectations for further Bank of Canada tightening continue to fade, USD/CAD may have more room to extend higher.
USD/CAD bear flag signals further downside amid oil price surge
USD/CAD is under pressure as rising oil prices strengthen the Canadian dollar and reinforce a broader downtrend in the pair. A bear flag breakdown suggests further downside could be possible if key technical levels continue to hold.
Brent oil nears key technical level
Brent oil is testing an important support area around $94, leaving the market at a technical crossroads. If that level continues to hold, Brent could rebound towards the converging short-term moving averages and potentially extend higher, but a break below support would weaken the outlook materially.
