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USD/CAD slips near 1.4100 as oil strength faces rate and tariff headwinds

Crude is at a fresh high since June 16 on Middle East supply risks, but USD/CAD is pressured by tariffs and expectations that the Bank of Canada will keep rates unchanged through 2026.

Reported · Written up by our desk · Major Pairs

USD/CAD is easing after a strong week, trading around the 1.4100 level as the US dollar pauses following a four-day run higher, according to FXStreet. The pair is struggling to extend its recent gains into Wednesday’s Asian session.

The Canadian dollar’s support is linked to firmer crude prices, which have risen to a fresh high since June 16 amid escalating US-Iran military tensions, the closure of the Strait of Hormuz, and Houthi threats related to potential naval disruption around Saudi Arabia. This oil strength tends to benefit the Canadian dollar because Canada is heavily exposed to energy exports.

At the same time, multiple factors are limiting upside for CAD. FXStreet notes that new US tariff plans targeting imported generic drugs would raise duties to 100% in 2028 and then 200% the following year, after a separate 50% tariff on most Canadian products, and it also points to hawkish Fed expectations tied to concerns about energy-driven inflation.

FXStreet further cites data showing softer Canadian consumer inflation, reinforcing expectations that the Bank of Canada will keep rates unchanged through the remainder of 2026. With the interest-rate outlook and trade risks weighing on CAD while safe-haven demand can support the greenback, the report suggests the path of least resistance for USD/CAD is to the downside, favoring dip-buying rather than aggressive bearish positioning.

Latest closeWTI crude $79.00 ▼0.8%

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