Falling WTI crude prices to $79.40 weigh on the CAD, offsetting temporary strength against the USD ahead of the Fed decision.
The USD/CAD pair retreated to 1.4113 in European trade Tuesday, as the Canadian Dollar’s brief outperformance faded amid a 2.2% drop in WTI oil prices to $79.40. Lower crude prices reduce demand for commodity-linked currencies like the CAD, which is sensitive to energy market shifts.
Traders await the Federal Reserve’s policy announcement Wednesday, with the CME FedWatch tool showing a 62% probability of unchanged rates at 3.50%-3.75%. The USD remained flat after Monday’s gains, while geopolitical tensions, including US-Iran negotiations, continued to pressure oil markets.
Technical indicators suggest a sideways trend, with the pair hovering near its 20-day EMA at 1.4103 and an RSI of 53.7 nearing neutral levels.