USD/CAD Price Forecast: Oil Prices Weigh on the CAD as Dollar Strengthens Above 1.4000

Back above 1.4000, USD/CAD has rebounded from Friday's five-month lows near 1.3960.
Pressure from softer oil prices weighs on the CAD as the US Dollar recoups some losses ahead of the Fed's decision.
Early signs of a bottom are emerging in the pair following a 2% decline over the past two weeks.

The US Dollar (USD) is recovering some ground against the Canadian Dollar (CAD) on Monday, with weaker oil prices weighing on the commodity-sensitive Loonie as investors await Wednesday's US Federal Reserve (Fed) monetary policy decision. Following a rebound from Friday's lows of 1.3968, USD/CAD is trading at 1.4023. The wider trend, however, remains bearish after a decline of nearly 2% over the past two weeks.

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

Attention has returned to the Fed's monetary policy decision, helping the Greenback advance against its major peers in a quiet Monday session. Following September's rate increase, the central bank is widely expected to keep rates unchanged. Nevertheless, elevated inflation risks have strengthened expectations of a second quarter-point increase in December.

Adding to the pressure on the Loonie, oil prices have retreated about 2% from Friday's highs. At the time of writing, Brent Oil is trading around $110.30 a barrel, compared with Friday's highs near $113.00. Markets have welcomed reports that Qatari negotiators have reached Tehran in an effort to ease the conflict with the US. US President Trump has also ruled out fresh attacks on Iran before the mid-term elections, helping ease pressure on oil prices.

Technical Analysis: Does Friday's "Hammer" Candle Signal a Potential Bullish Reversal?

With USD/CAD trading at 1.4018, upside momentum remains constrained, although Friday's "hammer" candle offers an early indication of a possible bullish reversal. Daily momentum indicators, by contrast, remain negative. Below 40, the Relative Strength Index (14) continues to signal weakness, while the Moving Average Convergence Divergence (MACD) sits firmly in negative territory. Together, these readings suggest that rallies could face resistance.

Thursday's high around 1.4040 continues to limit the bulls, blocking a move towards the 1.4080 area, which marks the October 19 low and October 21 high.

The first downside support zone spans the September 17 and 18 lows around 1.3975 and the 61.8% Fibonacci retracement of the September to October rally at 1.3965. Below this zone, attention would turn to the September 2 high near 1.3940, followed by the 78.2% Fibonacci retracement at 1.3874.

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

How Is the Canadian Dollar Performing Today?

The Canadian Dollar (CAD) recorded its strongest performance against the Japanese Yen today. Its percentage moves against the major currencies listed are set out in the table below.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.12%	0.19%	0.43%	0.10%	0.17%	0.35%	0.20%
EUR	-0.12%		0.11%	0.26%	-0.03%	0.05%	0.25%	0.09%
GBP	-0.19%	-0.11%		0.17%	-0.12%	-0.06%	0.14%	-0.02%
JPY	-0.43%	-0.26%	-0.17%		-0.29%	-0.25%	-0.05%	-0.21%
CAD	-0.10%	0.03%	0.12%	0.29%		0.04%	0.26%	0.10%
AUD	-0.17%	-0.05%	0.06%	0.25%	-0.04%		0.21%	0.03%
NZD	-0.35%	-0.25%	-0.14%	0.05%	-0.26%	-0.21%		-0.15%
CHF	-0.20%	-0.09%	0.02%	0.21%	-0.10%	-0.03%	0.15%

Percentage movements between the major currencies are displayed in the heat map. Select the base currency from the left-hand column and the quote currency from the top row. For instance, choosing the Canadian Dollar on the left and following that row across to the US Dollar gives the percentage change for CAD (base)/USD (quote) in the corresponding cell.