Recent USD/CAD levels near 1.41–1.42 reflect persistent monetary policy divergence, with the Federal Reserve’s target range at 3.75–4.00% after its September 25-basis-point hike and the Bank of Canada holding steady at 2.25%. Stronger U.S. inflation prints and resilient retail sales have kept December rate-hike odds elevated near 90%, widening the yield gap in favor of the greenback, while Canada’s softer labor market and contained underlying inflation limit BoC tightening room. Elevated oil prices from Middle East tensions provide some CAD support, yet tariff uncertainty and weak Canadian growth data continue to weigh. Traders will focus on the simultaneous BoC and Fed decisions on October 28 alongside Canadian CPI for signals on whether the rate differential narrows or persists into year-end.