21.05.202518:41 Forex Analysis & Reviews: USD/CAD. Analysis and Forecast

The USD/CAD pair is attracting sellers for the third consecutive day. A break below the 1.3900 level signals increased selling pressure, which could lead to further downside. Rising oil prices—driven by geopolitical tensions in the Middle East, particularly threats from Israel toward Iran—are raising concerns about potential supply disruptions. This supports the Canadian dollar, as Canada's economy is heavily reliant on oil exports.

Additionally, stronger-than-expected core inflation data from Canada reinforces expectations that the Bank of Canada may keep interest rates unchanged, which also supports the Canadian dollar. In contrast, the U.S. dollar is under pressure: the DXY index has fallen to a two-week low due to concerns over financial stability in the U.S. and expectations that the Federal Reserve may continue cutting interest rates in the future.

Political unpredictability linked to the Trump administration and renewed trade tensions between the U.S. and China are adding to the uncertainty and weighing on the dollar. All of these factors create favorable conditions for continued downside in the USD/CAD pair—especially when supported by technical analysis, which also points to a potential continuation of the downward trend. Oscillators on the daily chart remain in negative territory.

In the absence of significant economic data today, U.S. dollar movements will be influenced by speeches from FOMC members, while the Canadian dollar will be affected by oil price dynamics and inventory reports scheduled for release today.