Risk aversion or high oil prices: what will prevail in USDCAD

After declining, the USDCAD pair is forming a pullback while waiting for data from Canada. Quotes are trading around 1.3680. Find out more in our analysis for 20 April 2026.

USDCAD forecast: key takeaways

• Tehran stated that the strait has been closed again for commercial vessels
• Key inflation data in Canada, CPI for March, is released today
• The market is pricing in a 60% likelihood of a BoC rate hike in October
• USDCAD forecast for 20 April 2026: 1.3750 or 1.3645

Fundamental analysis

Today’s USDCAD forecast looks positive for the USD. The USDCAD pair is balancing between two powerful but opposing forces. On Monday morning, quotes are trading around 1.3680, reflecting renewed tensions in the Strait of Hormuz following the failure of negotiations between the US and Iran.

The market seemed to breathe a sigh of relief last week: Iran announced the reopening of the Strait of Hormuz, and the USDCAD pair reached new lows, falling to 1.3650, but the optimism proved premature.

Events affecting the USDCAD rate:

• Tehran stated that it had closed the strait again for commercial vessels, threatening to attack any vessel approaching the area
• The US fleet intensified the naval blockade of Iranian ports, which Iran regarded as a violation of the ceasefire regime and the key reason for the collapse of the second round of peace negotiations

The market reaction created a paradoxical picture: the dollar rose as a safe haven, but oil also surged, supporting the CAD. As a result, the pair became stuck in a narrow range, hesitating to make a decisive move.

Key inflation data in Canada, CPI for March, is due today. This is the main event of the day, which could become a trigger for the pair.

Forecasts and expectations:

• Monthly inflation is expected at 1.1%, up from 0.5% in February
• The energy shock from the war with Iran has sent fuel prices soaring, and this will inevitably impact consumer prices

Bank of Canada (BoC) position:

• Last week, BoC Governor Tiff Macklem gave an important signal. He stated that the central bank will closely watch long-term inflation expectations, rather than a short-term spike
• Macklem’s key phrase: we do not want to act too quickly and raise rates, especially when economic growth is already weak. But we do not want to be late and allow inflation to become entrenched
• Market reaction: the market is pricing in a 60% probability of a BoC rate hike in October, down from last week

The next BoC rate meeting will take place on 29 April. If today’s inflation data comes in well above the forecast, this will increase the chances of a hawkish move and strengthen the CAD.

The USDCAD pair is caught in a vice between geopolitics and monetary policy. The renewed conflict in the Strait of Hormuz is supporting the USD as a safe-haven asset, while rising oil prices are pulling the Canadian dollar in the opposite direction. Today’s inflation data from Canada will be the trigger that determines whether the pair can rise above 1.3700 and consolidate there, or whether it will plunge to new monthly lows. The market has frozen in anticipation of the figures.

Technical outlook

On the H4 chart, the USDCAD pair formed a Hammer reversal pattern near the lower Bollinger Band. At this stage, after the correction, it may continue the upward wave following this signal. Since quotes are within an ascending channel, growth towards the nearest resistance level at 1.3750 may be expected. A breakout above this level would open the way for a continued uptrend.

At the same time, the forecast for 20 April 2026 also includes a market scenario in which the price corrects towards the 1.3645 mark before growth.

USDCAD overview

• Asset: USDCAD
• Timeframe: H4 (Intraday)
• Trend: downward
• Key resistance levels: 1.3750 and 1.4000
• Key support levels: 1.3645 and 1.3555

USDCAD trading scenarios for today

Main scenario (Buy Stop)

Consolidation above 1.3750 would confirm the start of an uptrend and open the way towards 1.4000 if external pressure on the CAD remains.

• Take Profit: 1.4000
• Stop Loss: 1.3710

Alternative scenario (Sell Stop)

A breakout below the 1.3645 support level would indicate stronger pressure on the USD and continued downward movement, with the potential for quotes to fall towards the 1.3555 area.

• Take Profit: 1.3555
• Stop Loss: 1.3675

Risk factors

Geopolitics and oil prices remain factors influencing the USDCAD rate. Rising energy prices are supporting the CAD, but demand for the dollar as a safe-haven asset and expectations of hawkish Fed policy are keeping the USD strong.

Summary

The USDCAD pair remains under the influence of geopolitics and oil prices, which are supporting the CAD. USDCAD technical analysis suggests growth towards 1.3750 after a correction.

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