Sellers have been in-control on USD/CAD for the since the breakdown at 1.4150 support in mid-July, and this pushed the pair into oversold territory on daily RSI for the first time since January, which was followed by a strong bullish push that eventually led to the break back-above the 1.4000 handle. This comes after a dramatic weekend of headlines around tariffs between the U.S. and Canada, with the Canadian Dollar being punished on the prospect of more trade restrictions.
TL;DR: Canada is facing 50% US tariffs after trade talks collapsed, yet USD/CAD's muted reaction — with oil, bonds, and the Dollar all failing to confirm a Canada-specific stress trade — suggests markets see this as a narrower, contained shock rather than an economy-wide one.
For the week of August 17th, 2026, Statistics Canada released the July CPI report, showing headline inflation accelerating to 3.0% YoY—beating forecasts — driven by surging gasoline and travel costs, while underlying core metrics remained relatively subdued. In response, the Canadian dollar strengthened immediately, pushing USD/CAD down roughly 0.2% to 1.3850 on the day.
During the week of August 17–21, 2026, major currency pairs rallied against the U.S. dollar amid shifting monetary policy expectations. While accelerated Canadian inflation bolstered the CAD and a cooling job market complicated the RBA's outlook in Australia, markets looked past hawkish FOMC minutes to price in upcoming Fed rate cuts, driving broad gains led by NZD and AUD.
Crude Oil eyes more upside, USD/CAD could extend lower
The Canadian dollar has fallen nearly 2.8% from its June high, down five of the last six weeks against the U.S. dollar. Michael Boutros, Senior Market Analyst at StoneX, reads the Canadian dollar across the weekly, daily and four-hour charts.
USD/CAD Price Forecast: Bears look at 1.3850 support after rejection at 1.3900
As alluded to in a separate analysis piece released on Tuesday, one of the key headwinds overhanging USD/CAD was the status of tariff negotiations between the United States and Canada. Well, it looks like Donald Trump has brought TACO to the tariff negotiations.
As alluded to in a separate analysis piece released on Tuesday, one of the key headwinds overhanging USD/CAD was the status of tariff negotiations between the United States and Canada. Well, it looks like Donald Trump has brought TACO to the tariff negotiations.
USD/CAD is attempting to extend its recovery on Tuesday as traders look beyond Canada's hotter July inflation report and turn their attention to an increasingly important US-Canada trade deadline. The pair was trading around 1.3897 at the time of writing, having recovered from a recent low near 1.3850.
Over the last 3 trading sessions, the Canadian dollar has shown signs of strength, reflected in a USD/CAD decline of nearly -0.43%, marking a short-term bearish bias. This pressure has held steady following the release of Canada's inflation data and amid expectations of progress in tariff negotiations, keeping the Canadian currency from losing ground.
Key levels currently in play: AUD/USD, USD/CAD and more [Video]