USD/CAD trades near 1.42–1.426 in early October 2026, supported by a wide US-Canada yield differential after the Federal Reserve’s September rate increase to the 3.75–4.00% range and persistent inflation pressures. Hawkish Fed pricing, elevated Treasury yields, and softer Canadian growth and employment data have driven recent USD strength, while rising oil prices near or above $90 per barrel provide counter-support to the commodity-linked loonie. Ongoing US-Canada tariff disputes add downside risk to Canadian growth and further widen the policy gap. Key near-term catalysts include upcoming US CPI and employment releases, Bank of Canada decisions, and any shifts in geopolitical tensions or trade negotiations that could alter relative rate expectations or risk sentiment through year-end.