The Canadian dollar extended losses against the US dollar for a second consecutive session Tuesday, with USD/CAD trading around the 1.3850 level during Asian hours. The loonie remains under pressure despite support from elevated oil prices, as broader US dollar strength and escalating trade war concerns override traditional correlations.
The greenback’s firmness across major pairs is weighing heavily on the Canadian currency, with geopolitical tensions and trade policy uncertainty driving safe-haven flows into US assets. Typically, rising crude prices would provide tailwinds for the commodity-linked Canadian dollar, but current market dynamics show traders prioritizing risk-off positioning over fundamental energy market support.
The divergence between oil prices and CAD performance signals heightened market anxiety around trade relations, particularly relevant given Canada’s exposure to potential tariff implementations. Forex traders should monitor whether this disconnect persists or if traditional correlations reassert themselves.
FXnCO Insight
USD/CAD bulls maintain control above 1.3850 as trade war fears trump oil support, suggesting continued loonie weakness until trade tensions meaningfully de-escalate.
Source: FXStreet