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Canadian Dollar Steadies at Weakest Level of 2026: Will It Rebound after BoC Verdict?

Richard Dawson
Richard Dawson
Financial Market Analyst & Researcher
Canadian Dollar Steadies at Weakest Level of 2026
Summary
  • CADUSD closed at 0.7167 and steadied at its 2026 low level
  • Rising oil prices give mild support to the Loonie
  • Traders wait for the BoC interest rate decisions today, currently at 2.25%
  • The US May CPI report lands earlier at 8:30 AM ET

Why Is the Canadian Dollar Falling?

Here are the key price drivers for CAD/USD:

BoC Rate Decision Today

The Bank of Canada (BoC) announces its interest rate decision today at 9:45 AM ET, with the policy rate sitting at 2.25%. Markets expect a hold, but the BoC flagged in April that a hike may be needed to fight oil-driven inflation. Canadian CPI is projected to peak near 3% before easing to 2.5% in June. A hawkish surprise could lift the loonie off its 2026 lows.

US Inflation Is the Same-Day

The US May CPI (Consumer Price Index) report drops at 8:30 AM ET, just over an hour before the BoC. Forecasts point to 4.2% headline inflation YoY and 2.9% core, fueled by the Middle East energy shock. With traders pricing in no Fed cuts for 2026 and even possible hikes, a hot print would strengthen the dollar and push CAD/USD toward fresh lows.

Chief investment strategist at Charles Schwab, Liz Ann Sonders, said,

“It’s not just an oil story, it’s a money supply story, and it’s increasingly an AI story, So this is a broader inflation problem than just energy, meaning that we probably still have somewhat sticky inflation.”

Gold Slump Is Dragging the Loonie

Economists say the Canadian dollar now tracks gold more closely than crude oil, and gold has dropped roughly 20% from its January record. This adds a stalled economy with no growth over the past two quarters, and the loonie has become the weakest reserve currency among major industrialized nations.

Technical Indicators: What the Charts Say

USDCAD now trades below its key moving averages with no confirmed reversal signal. The major pair- Loonie is consolidating near 1.3950, a level last seen in March.

Resistance levels: 0.7220
Support levels: 0.7167

What Should Traders Do Now?

The next 24 hours are critical for CAD/USD. Two high-impact events hit within 75 minutes of each other today, and both can cause sharp, sudden volatility:

  • Avoid entering large new positions before the US CPI (8:30 AM ET) and BoC decision (9:45 AM ET)
  • Bearish traders should watch for a confirmed daily close below 0.7150
  • Bullish traders should wait for a hawkish BoC surprise and a clean daily close above 0.7220
  • Use tight stop losses during the two major events
Richard Dawson

About the author:

Richard Dawson

Financial Market Analyst & Researcher

Richard Dawson is an experienced market analyst and financial writer with nearly a decade of expertise in Forex, Crypto, and Gold trading. He specializes in VPS technologies, broker research, and copy trading systems. At SureShotFX, Richard writes blogs, educational guides, and research content that help traders make confident decisions.

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