Access Restricted

Quick answer: USD/CAD traded near 1.3989 on 18 September 2026, close to a six-week high, after the Federal Reserve raised rates by 25 basis points while the Bank of Canada held steady at 2.25%, widening the policy rate gap and pressuring the Canadian Dollar broadly this week.

Key Takeaways

• The Vantage USD/CAD CFD traded near 1.3989 on 18 September 2026, close to its highest level since 7 August, after the Fed raised its target range by 25 basis points on 16 September, its first hike since 2023.1,2
• The Bank of Canada (BoC) held its policy rate at 2.25% on 2 September, the seventh consecutive hold, keeping the Fed-BoC rate gap near 175 basis points.3,4
• Canada’s retaliatory tariffs on roughly $20B of US goods took effect on 8 September, and August inflation, published 16 September, held at 1.9% year on year.5,6

Two central banks, one week, two very different moods. The Vantage USD/CAD CFD traded near 1.3989 as of 09:10 (GMT+8) / 01:10 UTC on 18 September 2026, not far off its highest level since 7 August. Whether you call it USD/CAD, USD to CAD, or simply USD and CAD, this week’s USD/CAD news comes down to one thing: the Fed hiked, the BoC held, and the gap between them just got harder to ignore. It is one of the bigger forex news today stories, and worth watching closely into the next few sessions.

The Fed’s Hike Reset the Rate Gap with Canada

On 16 September, the Federal Reserve raised its target range by 25 basis points to 3.75% to 4.00%, its first increase since 2023, in a unanimous 12-0 vote.1,2 Two weeks earlier, the Bank of Canada (BoC) held its policy rate at 2.25% for a seventh consecutive meeting, citing inflation risks and tariff-driven uncertainty.3 That combination widened the interest rate gap and gave the US Dollar (USD) fresh support against the Canadian Dollar (CAD).

“The weakness stemmed from rising expectations for Fed rate hikes,” Erik Bregar, director of FX and precious metals risk management at Silver Gold Bull, told Reuters as the Loonie slid to a nine-day low ahead of the decision.9 Strategists at Scotiabank later noted that the Fed-BoC policy rate differential is back near 175 basis points, roughly where it sat for much of last year, pointing to this gap as the main driver of the CAD’s recent softness.4

The BoC’s 2 September statement leaned mildly hawkish: growth is broadening and inflation risks have increased, but tariffs keep the outlook uncertain enough that the Bank left itself room to move either way before 28 October.3 TD economists read the hold as a “cautious and data-dependent” stance for the rest of the year.8

Tariffs and A Softer Oil Price are Piling on the Pressure

Canada’s retaliatory tariffs on roughly $20B of US goods, ranging from 15% to 50%, took effect on 8 September after trade talks between Ottawa and Washington broke down, following the US’s own 50% tariff on Canadian goods from 22 August.5 The standoff continues to weigh on the commodity-linked CAD.

Statistics Canada’s August inflation reading, published 16 September, showed headline CPI at 1.9% year on year, matching consensus and up from 1.7% in July, while the BoC’s core trim measure eased to 3.0%.6 Crude oil normally supports the CAD given Canada’s role as a major exporter, but oil has pulled back even as the Dollar strengthened broadly, leaving USD/CAD without much pushback on its way up.7

What the Chart is Actually Showing

On the Vantage USD/CAD CFD hourly chart, the pair broke sharply higher during the 16 September session, coinciding with the Fed announcement, and has since traded in a choppier range roughly between 1.3930 and 1.4002, with the current price sitting near the upper end of that band. Both moving averages are sloping higher, with the 50-period average near 1.3970 sitting above the 200-period average near 1.3874, consistent with the uptrend visible on the chart since 10 September.

The Relative Strength Index (RSI) on the TradingView setup used for this analysis sits near 55 to 57, comfortably below the overbought territory above 70 it touched during the 16 to 17 September breakout, having also brushed that level in the prior week.

Gregor Horvat, a technical analyst at Wavetraders writing for FXStreet, described the move as “a stronger recovery here, but it could still be a counter-trend move” within the broader structure.7 Separately, FXStreet’s own daily-chart read flagged the post-Fed breakout through the 1.3940 confluence zone, combining the 100-day moving average and a Fibonacci retracement, as the key turning point.4

USD/CAD 1H Chart — post-Fed breakout above 1.3940 and consolidation near 1.3990 (TradingView, https://www.tradingview.com/symbols/FX-USDCAD/) Accessed on 18 September 2026. Data indicative, for informational purposes only.

USD/CAD Key Levels to Watch

Table 1: Key levels as of 18 September 2026. Source: FXStreet, Vantage USD/CAD CFD. Indicative only, not a recommendation.

Given how quickly USD/CAD reacted to these announcements, standard intraday ranges may not hold in the sessions ahead. A Stop Loss placed with reference to the 1.3940 and 1.3993 to 1.4054 zones above is one way traders manage that headline risk, rather than reacting after a sudden move has already happened.

Leverage works both ways in a market moving on central bank headlines, and Vantage offers leverage of up to 1:1000 on eligible accounts, which can affect an account balance as much on the downside as the upside. Position sizing is worth revisiting ahead of the BoC’s next decision on 28 October, and any USD/CAD forecast or CAD to USD forecast from major banks is worth reading with that in mind, since bank forecasts currently span a wide range.

RISK WARNING: CFDs are complex financial instruments and carry a high risk of losing money rapidly due to leverage. You should ensure you fully understand the risks involved and carefully consider whether you can afford to take the high risk of losing your money before trading.

Disclaimer: The information is provided for educational purposes only and doesn’t take into account your personal objectives, financial circumstances, or needs. It does not constitute investment advice. We encourage you to seek independent advice if necessary. The information has not been prepared in accordance with legal requirements designed to promote the independence of investment research. No representation or warranty is given as to the accuracy or completeness of any information contained within. This material may contain historical or past performance figures and should not be relied on. Furthermore estimates, forward-looking statements, and forecasts cannot be guaranteed. The information on this site and the products and services offered are not intended for distribution to any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

References

[1] “Fed rate decision September 2026: Rates rise to 3.75%-4%” – CNBC https://www.cnbc.com/2026/09/16/fed-rate-decision-september-2026.html Accessed on 18 September 2026.

[2] “Implementation Note issued September 16, 2026” – Federal Reserve Board https://www.federalreserve.gov/newsevents/pressreleases/monetary20260916a1.htm Accessed on 18 September 2026.

[3] “Bank of Canada maintains the policy rate at 2¼%” – Bank of Canada https://www.bankofcanada.ca/2026/09/fad-press-release-2026-09-02/ Accessed on 18 September 2026.

[4] “Canadian Dollar bears retain control near August 7 low amid US-Canada rate gap/trade war” – FXStreet https://www.fxstreet.com/news/canadian-dollar-bears-retain-control-near-august-7-low-amid-us-canada-rate-gap-trade-war-202609180145 Accessed on 18 September 2026.

[5] “Canada imposes $20 billion retaliatory tariffs on U.S. goods amid stalled trade talks” – Reuters https://coloradobiz.com/canada-retaliatory-tariffs-us-trade-talks-stall/ Accessed on 18 September 2026.

[6] “Canada Aug CPI 1.9% YoY vs July 1.7%, matching forecast” – MNI Markets https://www.mnimarkets.com/articles/canada-aug-cpi-19percent-yoy-vs-july-17percent-matching-forecast-1758025808308 Accessed on 18 September 2026.

[7] “USD/CAD: Strong recovery approaches key Fibonacci resistance” – FXStreet https://www.fxstreet.com/analysis/usd-cad-strong-recovery-approaches-key-fibonacci-resistance-202609171005 Accessed on 18 September 2026.

[8] “The Bank of Canada holds its interest rate on September 2” – TD Stories https://stories.td.com/ca/en/article/bank-of-canada-interest-rate-september-2026 Accessed on 18 September 2026.

[9] “Canadian dollar weakens to nine-day low on Fed rate hike bets” – Reuters (via Kitco) https://www.kitco.com/news/off-the-wire/2026-09-11/canadian-dollar-weakens-nine-day-low-fed-rate-hike-bets Accessed on 18 September 2026.