USD/CAD Falls to 1.3800 as Oil Strengthens and Tariff Relief Fades

USD/CAD Retreats Toward 1.3800 as Oil Rises and Tariff Relief Fades

The USD/CAD currency pair is moving lower on Thursday, retreating from its earlier highs and trading near 1.3800 as oil prices rise and the initial market optimism over the US court ruling against President Trump’s tariffs begins to fade.

US Dollar Weakens as Focus Shifts to Key Data

After climbing above the 100.00 psychological mark, the US Dollar Index (DXY) has pulled back. The initial surge was triggered by the US federal court decision, which invalidated the 'Liberation Day' tariffs, stating that only Congress has the authority to regulate foreign trade.

However, with US GDP (second estimate) and Initial Jobless Claims data due later in the day, investor sentiment has turned cautious. The euphoria over the tariff relief has subsided, and traders are reassessing the implications for the Federal Reserve’s rate path, with cut expectations trimmed to 42 basis points from 50 earlier this week.

Canadian Dollar Strengthens on Oil Recovery

On the other hand, the Canadian Dollar (CAD) has found support from rising crude oil prices, which are rebounding amid renewed hopes for trade normalization. As a commodity-linked currency, the CAD tends to benefit from higher energy prices, and this shift has helped pull the USD/CAD lower.