USD/CAD Slips to 1.3550 on Rising Oil Prices and Canadian Yield Surge

USD/CAD Slips to 1.3550 on Rising Oil Prices and Canadian Yield Surge

USD/CAD remains under pressure during Tuesday's European session, falling to around 1.3550. The Canadian Dollar (CAD) gains ground as crude oil prices rise and Canadian government bond yields hit multi-month highs. This marks the fourth consecutive daily drop for the USD/CAD pair.

Oil Prices Rebound Amid Geopolitical Tensions

West Texas Intermediate (WTI) crude oil rose to $71.10 per barrel, reversing earlier losses. Supply disruption fears persist due to intensifying Israel-Iran hostilities, particularly concerns surrounding the Strait of Hormuz, a critical energy transport route. As a major oil exporter, Canada benefits from rising oil prices, supporting the CAD.

Canadian Yields at 5-Month High on Hawkish BoC Outlook

The Canadian 10-year yield now stands at 3.4%, its highest level in five months. This follows a surprise 1.2% increase in April retail sales and persistently elevated core inflation, reinforcing expectations for hawkish policy action by the Bank of Canada (BoC). Higher yields tend to attract foreign capital, boosting demand for the Canadian Dollar.

Key Takeaways for Traders:

• Watch oil price movements for CAD implications.
• Canadian macro data (e.g., inflation, retail sales) could further fuel BoC hawkishness.
• USD/CAD technical levels to monitor: support near 1.3510, resistance at 1.3620.
• Geopolitical risk and FOMC meeting later this week may drive volatility.

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• Live USD/CAD Chart
• BoC Rate Forecast & Policy Tracker
• Oil Prices and Their Impact on Forex
• Geopolitical Risk and Currency Markets