Canadian Dollar Weakens Near April 2025 Lows Amid Oil Slump and Strong USD
The Canadian Dollar (CAD) is facing pressure near its April 2025 lows, driven by weak crude oil prices, a dovish stance from the Bank of Canada (BoC), and escalating US-Canada trade tensions. These factors are contributing to the Loonie's underperformance, while the US Dollar (USD) benefits from geopolitical risks and elevated US bond yields, boosting the USD/CAD pair.
The USD/CAD pair is trading around 1.4265, having previously reached a high of 1.4300, its highest level since April 2025. Weak crude oil prices, lingering near a one-month low due to resilient Middle Eastern exports and a G7 emergency stockpile release, are adding to the CAD's struggles. The BoC's dovish policy stance and ongoing trade tensions further weaken the Canadian Dollar, while strong bullish sentiment surrounds the USD.
Geopolitical tensions in the Middle East, including attacks by Yemen's Houthi group and potential Israeli actions against Iran, are supporting the safe-haven USD. Despite moderating inflation and weak US Nonfarm Payrolls data, traders still anticipate an over 80% chance of a Federal Reserve rate hike by year-end. However, the USD has pulled back slightly from its April 2025 high, awaiting further cues from the Fed's policy path.
Technical analysis shows the USD/CAD pair holding above the 100-day Simple Moving Average at 1.4003, with a bullish near-term bias. However, overbought conditions signal potential corrective pullbacks, with support levels around 1.4200 and 1.4150-1.4145. The fundamental backdrop suggests the USD/CAD pair is likely to continue its upward trajectory.