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USD/CAD Forecast: Loonie Tops Ahead of Fed and BoC Rate Releases

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  • September 17, 2025
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USD/CAD rises slightly to 1.3760 as investors wait for central bank policy decisions at the Federal Reserve and the Bank of Canada, both likely to reduce interest rates due to slowing labor markets and softening inflation. Although the duo remains slightly bullish intraday, technical indicators like a Head and Shoulder formation and a bearish configuration below the 20-day EMA indicate the potential for downward risks. Investors will keenly look to comments from Fed Chair Jerome Powell and BoC Governor Tiff Macklem for direction on coming rate cuts, with possible moves ranging from a drop towards 1.3600 if bearish pressure continues, to a bounce towards 1.4000 if upside resistance levels are surpassed. KEY LOOKOUTS • Both central banks will cut rates, with markets eagerly looking for direction on coming easing cycles. • A Head and Shoulder pattern indicates a possible bearish reversal if the neckline around 1.3715 is breached. • The pair is below the 20-day EMA level of 1.3800 and the RSI is around 40, suggesting potential additional downward pressure. • Support is around 1.3722 and 1.3600, and resistance is around 1.3925 and 1.4000. USD/CAD trades close to 1.3760 as markets await significant interest rate decisions from the Bank of Canada and the Federal Reserve, both which are expected to cut rates. Early indications of a bearish reversal have been observed in the pair with a Head and Shoulder formation and price action below the 20-day EMA. Momentum gauges also hint at weakness, as the RSI is heading towards 40. Top priority now centers on press conferences by Fed Chair Jerome Powell and BoC Governor Tiff Macklem, which can offer clearer guidance for the currency pair’s future direction. USD/CAD is stuck around 1.3760 as investors wait for policy directions ahead of Fed and BoC interest rate cuts. A Head and Shoulder formation and poor momentum suggest possible downside to 1.3600 in case support lines break. • USD/CAD is around 1.3760 in anticipation of Fed and BoC monetary policy decisions. • Central banks are likely to reduce interest rates due to weak labor markets and softening inflation. • A Head and Shoulder chart pattern warns of a bearish reversal. • The pattern neckline is at 1.3715, which is an important support level. • The pair is below the 20-day EMA, currently at 1.3800, thus maintaining the short-term trend bearish. • RSI is drifting around 40 and should weaken further if it falls below that. • Important downside targets are at 1.3722, 1.3600, and 1.3540, while resistance is at 1.3925 and 1.4000. The USD/CAD currency pair is trading slightly higher as the market focuses on upcoming monetary policy announcements by the Federal Reserve and the Bank of Canada. Both central banks are expected to cut interest rates due to slowing labor market conditions and decelerating inflationary pressures. For Canada, softer inflation readings have improved the argument in favor of a dovish policy, and for the United States, the Fed is set to initiate its cycle of monetary easing even as inflation continues to remain above target. USD/CAD DAILY CHART PRICE SOURCE: TradingView Market participants will watch closely for the post-meeting press briefings from Fed Chair Jerome Powell and BoC Governor Tiff Macklem for additional commentary on the tempo and magnitude of future rate reductions. The cue from these central bankers will be instrumental in guiding investor sentiment and establishing the tone for currency market action in the weeks to come. TECHNICAL ANALYSIS USD/CAD is exhibiting bearish setup, and a Head and Shoulder formation is underway with the neckline at approximately 1.3715. The pair is still trading below the 20-day Exponential Moving Average (EMA) at 1.3800, which indicates sellers are in control in the short term. In contrast, the 14-day RSI remains close to 40, reflecting declining momentum, and a strong break below this point may sharpen downward pressure. Major support levels are at 1.3722, then 1.3600 and 1.3540, while resistance is capped at 1.3925 and 1.4000. FORECAST If USD/CAD cannot stay above the neckline support at 1.3715, the pair may carry its decline lower. A fall below this level would most likely attract new selling pressure, subjecting the August 7 low of 1.3722. Further weakness may drive the pair towards the psychological 1.3600 level, with additional losses targeting the June 16 low of 1.3540. Conversely, if USD/CAD can maintain its upward momentum above 1.3800 and vault through the August 22 peak of 1.3925, a rebound rally may ensue. This advance would set the stage to target the 1.4000 ceiling, with firm resistance at 1.4075, which had not been seen since early April. Closing above these levels would realign the near-term sentiment in favor of the bulls.

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Currencies

USD/CAD Holds Firm Above 1.3850 as BoC Rate Cut Bets Rise and US CPI Data Looms

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  • September 11, 2025
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USD/CAD pair is holding steady near 1.3875 in early European trading on Thursday as investors weigh contrasting economic signals from the US and Canada. Rising expectations of a Bank of Canada rate cut, fueled by weak Canadian job data and a higher unemployment rate, continue to pressure the Loonie. In contrast, investors are preparing for the US August CPI report to be released, which is expected to reveal that inflation is ticking up. The result of this major data may well decide the pair’s short-term trajectory, with weaker inflation to limit the Greenback’s advance. KEY LOOKOUTS • Broadly expected 25 bps reduction in September, but chances of further relaxation in 2025. • August job losses of 66,000 and an unemployment rate of 7.1% put more pressure on the Canadian Dollar. • August CPI forecast at 2.9% YoY, with core CPI at 3.1%; any shock will influence USD momentum. • The pair remains strong above 1.3850, and buyers anticipate the next move after inflation release. USD/CAD holds firm above 1.3850 with investors eyeing near-term US inflation prints and increased Bank of Canada rate cut expectations. The Canadian Dollar is weakening following soft labor market data depicting job losses and rising unemployment, boosting the prospects of September policy relief. Conversely, the US Dollar remains firm as they anticipate the release of the August CPI data, with markets looking for inflation to creep higher. The outcome of the data will be critical in determining near-term direction of the pair, with weaker US inflation able to restrain the advance of the Greenback. USD/CAD trades firmly above 1.3850 as weak Canadian jobs data boosts expectations of a BoC rate cut. Investors now await the US CPI report, which could set the tone for the pair’s next move. • USD/CAD holds near 1.3875 in Thursday’s early European session. • Canadian Dollar pressured by weak labor market data showing 66,000 job losses in August. • Unemployment Rate jumps to 7.1%, making a BoC rate cut more likely. • A 25 bps BoC cut in September is priced by markets, with further easing in 2025 feasible. • US CPI inflation report today, with headline CPI at 2.9% YoY forecasted. • Core CPI forecast to stay at 3.1% YoY, the joint highest since February. • Inflation result focus in the market, with softer US CPI potentially limiting the gains of USD against the Loonie. The USD/CAD currency pair is in focus as market players consider two key variables: the policy direction of the Bank of Canada and the release of the US Consumer Price Index. Recent economic statistics from Canada were poor, including the shedding of 66,000 jobs in August and an increase in unemployment to 7.1%. This decline has made more likely the expectation that the Bank of Canada will proceed to make a rate cut in September, an action that most economists argue can be the start of a wider easing cycle in 2025. USD/CAD DAILY CHART PRICE SOURCE: TradingView Meanwhile, the US is gearing up for the release of its August CPI inflation data, a release that does a lot of heavy lifting for market mood. Expectations are for headline inflation to reach 2.9% year-on-year, with the core reading staying at 3.1%. Both of these readings will be closely watched by traders and policymakers, as they bring new information about the health of price pressures in the world’s biggest economy and inform Federal Reserve policy expectations. TECHNICAL ANALYSIS USD/CAD is holding firm above the 1.3850 level, an important level of support for the pair. Persistent strength over this region indicates buyers are still in charge, with the immediate resistance observed around the 1.3900 psychological level. A clean break above this barrier may lead to additional upside pressure. On the lower side, any breakdown below 1.3850 may initiate selling pressures, exposing subsequent support levels around 1.3820 and 1.3780. Traders will most probably wait for the US CPI result to validate the pair’s future directional bias. FORECAST Should US CPI figures be higher than anticipated, it can confirm bets on the Federal Reserve keeping the policy on a tighter leash for an extended period, thus strengthening the US Dollar. In such a case, USD/CAD can get some traction to take prices past the 1.3900 resistance into 1.3950 and beyond in the near future. On the other hand, if the inflation rates indicate a cooling down, the Greenback might lose pace as markets can speculate an imminent Fed rate reduction. This would ease the pressure on the Canadian Dollar and might take USD/CAD lower. A break below the 1.3850 support area may prompt further losses, with 1.3820 and 1.3780 being likely downside targets.

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Currencies

BoC Rate Cut Speculation Weighs on Canadian Dollar, Boosts USD/CAD.

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  • September 3, 2025
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USD/CAD currency pair is becoming stronger, marching towards 1.3800, largely because of rising chances of an interest rate reduction by the Bank of Canada (BoC). Market participants are now pricing in greater odds of a rate reduction in September, after a softer-than-projected economic downturn in the second quarter and the continuing effects of tariffs. This expected monetary policy divergence, with the BoC possibly cutting rates while the US Federal Reserve continues to be more dovish, makes the Canadian Dollar (CAD) less desirable. On top of that, a worldwide bond market selloff is enticing investors towards the safe-haven US Dollar (USD), further increasing the pair. Though escalating crude oil prices may provide some relief to the commodity-linked CAD, overall sentiment is in favor of a stronger USD as market players look to major US economic releases, such as the JOLTS Job Openings and the Fed’s Beige Book, for direction. KEY LOOKOUTS • Watch closely for the scheduled US JOLTS Job Openings and Fed Beige Book, which may hold hints of the health of the US labor market and economy. • The market now prices in 55% probability of a rate cut at the next Bank of Canada meeting on September 17. • As an oil-linked currency, the value of the CAD is dictated by crude oil prices. • General market “risk-off” mood induced by mounting worldwide debt mountains continues to play into the safe-haven USD, providing a steady tailwind for the USD/CAD pair. Canadian Dollar (CAD) recent decline against the US Dollar (USD), forcing the USD/CAD pair towards 1.3800, is mainly due to evolving monetary policy expectations. With the market now pricing a greater likelihood of an interest rate reduction by the Bank of Canada (BoC) on September 17, following a recent period of economic decline, the CAD is no longer attractive to investors wanting higher yields. This is compounded by a worldwide “risk-off” mood spurred on by increasing sovereign debt levels, causing safe-haven flows to go towards the US Dollar. Although higher crude oil prices may act as a natural support for the commodity-linked CAD, the divergent policy expectations of the BoC and the Federal Reserve, as well as the general risk aversion, are likely to keep the USD/CAD pair supported in the near future. CAD is under pressure as markets expect a BoC interest rate cut on 17th September. The US Dollar is gaining traction as a safe-haven currency as the world becomes increasingly concerned about the global economy, with the focal point today being US JOLTS Job Openings and Fed Beige Book for further guidance. The direction of the pair will be greatly determined by the divergence in monetary policy and overall risk appetite. • The main impetus for the strength of the USD/CAD is the rise in market expectation of a Bank of Canada interest rate reduction on September 17. • The expectation is driven by a sharper-than-expected decline in Canada’s Q2 economic production, which has pulled down the Canadian dollar. • A surge in debt worries and a global bond market sell-off are driving risk aversion, which prompts investors to turn into the haven of the US Dollar, further supporting the USD/CAD pair. • The BoC’s potential for rate cuts against the Federal Reserve’s more conservative policy stance creates an extremely powerful tailwind for the USD. • A crude oil price hike may play a counter-force role, as Canada is one of the largest oil-exporting nations, and this may help support the CAD and cap the pair’s upside. • Upcoming later today are key economic indicators such as the US JOLTS Job Openings and the Fed Beige Book, and these are expected to impact the pair’s near-term direction. • Outside of September, BofA economists expect additional BoC rate reductions in October and December that will further put pressure on the CAD over the next few months. The US Dollar is rallying against the Canadian Dollar with the currency pair now trading at around 1.3800 mainly due to a change in market expectations regarding the Bank of Canada (BoC). A recent Canadian economic slowdown has caused traders to raise substantially their bets for a BoC rate cut in September, from the 40% probability last week to almost 55% currently. This expected monetary policy divergence, with the Canadian central bank set to cut its rates while the US Federal Reserve holds back, is one of the main concerns affecting the Canadian Dollar. Second, increasing global debt and economic instability are inducing investors to flee to safe-haven currencies, with the US Dollar as a major beneficiary of this risk-off demand. USD/CAD DAILY PRICE CHART SOURCE: TradingView Aside from the monetary policy and risk drivers, the price of crude oil is also a factor in this scenario. While the Canadian dollar is generally assisted by stronger oil prices, the current trend of weakening is strong enough to overcome this commodity-related correlation. Market focus is now shifting towards future US economic releases, namely the JOLTS Job Openings and the Fed Beige Book, for more indications regarding the US economy’s well-being. Any indication of the strengthening of the US might reinforce such a belief that the Fed will delay rate cuts, widening the policy differential between the two nations further and potentially driving the USD/CAD pair upward. TECHNICAL ANALYSIS The USD/CAD pair has been displaying a clear trend upwards, as it is trading in positive mode for the third day in a row. The pair’s recent price at 1.3795 is a major level since it has been a resistance level previously. A break above this level, sustained, could be taken as an indication of additional bullish action, possibly aimed at the next resistance level at 1.3850 and then 1.3900. If the pair is not able to break through this level of resistance, it may retreat towards its recent support levels, which stand at 1.3710 and 1.3610. The short-term direction is underpinned by fundamentals such as divergence in monetary policy, but the traders will be waiting for a confirmed breakout through technical

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Currencies

USD/CAD Rises on Fed Cook’s Sacking, Eliciting Dollar Sentiment, Investors Await Canada GDP and Trade Negotiations

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  • August 27, 2025
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The USD/CAD currency pair rose to about 1.3850 during Wednesday’s late Asian trading following the US Dollar’s appreciation even as the Federal Reserve faced political uncertainty after President Donald Trump sacked Fed Governor Lisa Cook, who has threatened to contest the move in the courts legally. Anxiety regarding the integrity of US institutions has burdened the Greenback, with Canadian Dollar traders looking to clarity from the forthcoming US-Canada trade talks and this Friday’s release of Canada’s Q2 GDP figures to guide the Loonie’s short-term direction. KEY LOOKOUTS • Political tensions escalate following President Trump’s sacking of Fed Governor Lisa Cook, raising questions regarding the integrity of US financial institutions. • Cook’s move to sue over her firing puts additional pressure on the stability of the US Dollar. • Investors watch closely for Canadian official-US counterpart talks for possible trade concessions. • Canadian GDP and June and Q2 figures, to be released Friday, are predicted to give the Canadian Dollar new direction. USD/CAD currency pair edged up near 1.3850 on Wednesday as the US Dollar slightly benefited despite political unrest over the Federal Reserve. The confidence of the Greenback in the market has been rattled following President Trump’s sudden removal of Fed Governor Lisa Cook, leading her to seek legal recourse over the move. The political drama has left US institutions’ credibility in question, with investors now being cautious. In the meantime, the Canadian Dollar moves sideways as markets wait for developments on US-Canada trade negotiations and the release of Canada’s Q2 GDP figures, both of which are expected to shape the Loonie’s next direction. USD/CAD hovers around 1.3850 as the US Dollar resists despite Fed uncertainty following Governor Lisa Cook’s removal. Market players remain on hold until US-Canada trade talks and Canada’s Q2 GDP release later Friday. • USD/CAD ticks higher to about 1.3850 in Wednesday late Asian dealing. • US Dollar rises modestly with the DXY at 98.35 amid political uncertainty. • President Trump’s firing of Fed Governor Lisa Cook creates institutional credibility issues. • Lisa Cook will sue to overturn her firing, ratcheting up political tensions. • Market sentiment is still wary of US financial decision-making stability. • Canadian Dollar moves horizontally as investors wait for updates on US-Canada trade negotiations. • Canada’s Q2 and June GDP figures, released Friday, may take direction of the Loonie. The USD/CAD currency pair has witnessed small increases as political instability in the US continues to take its toll on investor morale. The abrupt firing of Fed Governor Lisa Cook by President Donald Trump is making the credibility and stability of US financial institutions questionable. Faced with this, Cook has announced intentions to pursue a lawsuit against her termination, putting more pressure on the market. In spite of this, the US Dollar has remained relatively strong, indicating careful optimism in investors. USD/CAD DAILY PRICE CHART SOURCE: TradingView On the Canadian side, the spotlight is on future trade talks with the United States and local economic indicators. Canadian government representatives, such as cabinet minister Dominic LeBlanc, have been in talks with American counterparts in order to obtain trade concessions, which have indicated movement toward a possible deal. In the meantime, investors are setting their sights for the announcement of Canada’s Q2 GDP figures, which should give guidance regarding the nation’s economic performance and determine the near-term direction of the Canadian Dollar. TECHNICAL ANALYSIS USD/CAD trades at 1.3850, with a light positive bias as the pair tests short-term resistance. The US Dollar Index (DXY) trading around 98.35 facilitates the Loonie pair’s small gains, while major moving averages indicate minimal momentum in either direction. The first support is expected near 1.3800, with the first resistance around 1.3900, pointing towards a likely consolidation phase till the big economic or political drivers spark a conclusive breakout. Traders can seek validation from trend and volume indicators before taking a directional view. FORECAST In the near term, USD/CAD could experience modest upside to the 1.3900 level if the US Dollar continues to find itself supported in the face of geopolitical uncertainty. Positive news in the US-Canada trade negotiations or a stronger-than-projected US economic outlook can further support the pair, prompting prudent bullish sentiments from traders. Alternatively, the pair is likely to experience downward pressure if doubts about the credibility of the US Federal Reserve grow or if Canada’s Q2 GDP figures are better than projected, a prospect that would boost the Loonie. Significant support of the order of 1.3800 would be tested under such circumstances, with further slides likely should broader market risk perception turn against the Canadian Currency.

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Currencies

USD/CAD Price Forecast: Bulls Target 1.3900 as Fed-BoC Divergence Spreads Rally

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  • August 21, 2025
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USD/CAD continues its bullish trend for the third day in succession, trading close to the 1.3880 mark, its strongest since May 21, as Fed-BoC policy divergence supports the US Dollar demand. The hawkish FOMC Minutes strengthened USD, while the dovish Bank of Canada and modest support from crude oil prices suppressed the Canadian Dollar. Technically, the duo’s breakout through the 100-day SMA and continued advances past 1.3800 favor bulls, with near-term upside targets resting at 1.3900, 1.3950, and the psychological 1.4000 handle. Support, on the other hand, comes in solidly at 1.3850 and 1.3800, capping corrective dips and affirming a positive outlook. KEY LOOKOUTS • Dovish Bank of Canada tilt against hawkish Fed signals keep pushing USD/CAD higher. • Continued rise above the 100-day SMA and 1.3800 level consolidates bullish strength. • A thrust beyond 1.3900 might pave the way to 1.3950, 1.4000, and May’s swing high at 1.4015. • Near-term support lies around 1.3850–1.3800, with further losses likely only in case of a break below 1.3790. USD/CAD has a strong bullish bias, trading in the vicinity of the 1.3880 level for the third consecutive day as the Fed-BoC policy divergence continues to remain positive for the buyers. The US Dollar was bolstered by hawkish FOMC Minutes, while the Canadian Dollar remained under pressure with no strong support from crude oil prices. Technically, the break above the 100-day SMA and the important 1.3800 level supports the bullish inclination, with targets for the upside at 1.3900, 1.3950, and the psychological 1.4000 level. To the downside, steep support levels at 1.3850–1.3800 are likely to limit corrective pullbacks, maintaining the general trend direction tilted to the upside. USD/CAD touches 1.3880, a high not seen since May, on Fed-BoC policy divergence driving bullish momentum. Further gains are supported by a breakout above the 100-day SMA, with targets at 1.3900 and 1.4000, while dips are capped around 1.3850–1.3800. • USD/CAD rises for the third day in succession, touching 1.3880, its highest since May 21. • Hawkish FOMC Minutes shore up the US Dollar, underpinning the bullish trend. • The dovish attitude of the Bank of Canada still pressures the Canadian Dollar. • Crude Oil’s small rally offers minimal relief to the CAD. • Technical breakout through the 100-day SMA and 1.3800 confirms the uptrend. • Upside targets are observed at 1.3900, 1.3950, and the psychological 1.4000 level. • Robust support lies at 1.3850–1.3800, with increased downside risk only below 1.3790. The USD/CAD currency pair continues to be favored by differential monetary policy cues between the Federal Reserve and the Bank of Canada. The publication of dovish FOMC Minutes supported the view that the Fed can leave interest rates elevated for longer, stirring demand for the US Dollar. While this, the Canadian Dollar still struggles as the BoC becomes increasingly dovish and cautious, indicating a less aggressive policy stance than the Fed. This differential policy has opened up opportunities for the USD to appreciate against the CAD. USD/CAD DAILY PRICE CHART SOURCE: TradingView Besides central bank divergence, there are also wider market forces behind USD/CAD trends. Crude oil prices, one of the most influential drivers of the Canadian Dollar, have experienced only a modest increase, providing little support to the CAD. In the absence of the oil market being able to offer meaningful relief, and risk appetite overall remaining subdued with global economic uncertainty, the US Dollar continues to gain from being a safe haven. This confluence of policy divergence and external market influences is the foundation for the pair’s prolonged positive trend. TECHNICAL ANALYSIS USD/CAD’s break above the 100-day Simple Moving Average (SMA) and the pivotal 1.3800 level has strengthened the bullish scenario, with the momentum indicators on the daily chart remaining strongly in positive ground. Near-term resistance is around the 1.3900 area, and a determined break above this level could set the stage for additional gains to 1.3950 and the psychological 1.4000 barrier, next to May’s swing high of 1.4015. On the negative side, support is at 1.3850–1.3800, with the 100-day SMA at 1.3790 serving as a key floor; investors would need to break below this region to disappoint the bullish configuration and expose the pair to lower corrective falls. FORECAST The USD/CAD currency pair is likely to maintain its bullish trend in the near future, with the Fed-BoC policy divergence expected to favour upticks. A consistent breakout above the 1.3900 level would ensure buyers’ dominance and set the stage for a rise to 1.3950, and then the important psychological mark of 1.4000. If the bullish trend continues, May’s swing high of around 1.4015 could also be seen coming into action, giving further room for upticks. To the downside, however, any corrective pullback is expected to encounter firm demand around the 1.3850–1.3800 zone, capping further losses. The 100-day SMA at 1.3790 is another cushion, and only a sharp close below the same may initiate a bearish reversal. In that case, the pair may extend down to 1.3750, 1.3720, and possibly the 1.3700 psychological level, turning the short-term focus once again in favor of sellers.

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Currencies

USD/CAD Falls to 1.3800 as Dovish Fed Outlook, Trade Tariff Risks Deter Dollar

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  • August 18, 2025
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USD/CAD dropped towards 1.3800 in Monday’s Asian session as dovish hopes surrounding the Federal Reserve’s September policy meeting dented the US Dollar. Weaker US economic reports, such as falls in consumer sentiment, and slower retail sales growth, solidified expectations for a Fed rate cut. Meanwhile, the Trump administration’s widened tariffs on steel, aluminum, and semiconductor imports further clouded the US outlook. The Bank of Canada, in contrast, has less need to rush policy easing, with its trimmed mean inflation maintaining at 3% in June, leading it to remain cautious notwithstanding the recent rate cuts. KEY LOOKOUTS • Weaker US data reinforces market expectations of a September Federal Reserve rate cut. • Trump’s extension of tariffs on steel, aluminum, and semiconductors has the potential to spur additional economic headwinds. • Canada’s trimmed mean inflation at 3% dampens pressure for the Bank of Canada to accelerate rate cuts. • The pair is near 1.3800, losing impetus following two successive days of advances, with sentiment leaning against the US Dollar. USD/CAD dipped lower to the vicinity of 1.3800 on Monday as dovish speculation about the Federal Reserve’s policy trajectory put pressure on the US Dollar. Downbeat US data, such as decreased consumer sentiment and weaker retail sales, contributed to rate cut speculation in September, while freshly widened US tariffs on steel, aluminum, and semiconductors posed additional negative risks. Conversely, the inflation of Canada is still sticky at 3% based on the trimmed mean metric, leaving the Bank of Canada with not much hurry to re-start easing after its July rate reduction, thus offering some relative support to the Canadian Dollar. USD/CAD fell to close to 1.3800 as dovish Fed hopes and softer US data weighed on the Dollar. That said, Canada’s solid 3% trimmed mean inflation took the heat out of further aggressive BoC rate cuts, providing some support to the Loonie. • USD/CAD fell back to close to 1.3800 in Monday’s Asian trading after two consecutive days of gains. • Dovish Fed expectations increased with weaker US consumer sentiment and softer retail sales information hinting at a September rate cut. • Michigan Consumer Sentiment Index fell to 58.6 in August, below expectations of 62.0 and from July’s 61.7. • US Retail Sales slowed, increasing 0.5% in July compared to 0.9% in June, affirming cooling demand. • Trump administration widened tariffs on steel, aluminum, and semiconductor imports, introducing economic uncertainty. • Trimmed mean inflation in Canada was at 3% in June, remaining wary of the Bank of Canada even after a July cut to 2.75%. • Relative policy divergence between the Fed and BoC favored the Canadian Dollar versus the US Dollar. • The USD/CAD is trading around 1.3800 on a change in market mood based on expectations about monetary policies in the US and Canada. Recent US statistics, such as diminished consumer sentiment and decelerating retail sales, have spurred speculation that the Fed could proceed with a rate cut in September. Concurrently, the Trump administration’s announcement of expanding tariffs on steel, aluminum, and semiconductors has placed increased pressure on the economic picture, worrying traders and investors. USD/CAD DAILY PRICE CHART SOURCE: TradingView Canadian inflation continues high, with the Bank of Canada’s trimmed mean gauge still at 3% in June. Although the central bank reduced its policy rate to 2.75% in July, policymakers have taken a cautious tone on future action. Persistent service prices and risk premia embedded in global trade tensions make it less likely that the BoC will be in a hurry to offer further easing. This conservative position lends the Canadian Dollar a relative strength, even as underlying economic woes continue to unfold in both economies. TECHNICAL ANALYSIS USD/CAD is respecting the 1.3800 psychological level, where nearby support is apparent. A consistent break below this can open up more losses towards the 1.3760–1.3740 area. To the upside, resistance lines up around 1.3840–1.3860, followed by the 1.3900 handle, which continues to be a major hurdle for buyers. The general bias remains tilted in favor of weakness as long as the pair remains below the 1.3900 handle, with the traders keeping a keen eye on whether the pair can hold at support or continue its corrective trend. FORECAST If USD/CAD can hold at or above the 1.3800 support region, a bounce could be observed towards the 1.3840–1.3860 resistance zone. A clean break above this range would likely set the stage for a test of the 1.3900 handle, which is still a major obstacle for additional bullish pressure. Improved US data or any alteration in Fed speak away from imminent rate cuts could also be a source of support for the US Dollar, pushing the pair higher. Conversely, a failure to hold above 1.3800 would probably attract additional selling pressure, taking the pair down to 1.3760 and then 1.3740 levels. A clean break below these supports might prolong the fall towards 1.3700, indicating greater weakness in the near term. Weaker US economic releases or escalating trade tensions can support the bearish outlook, with preference for further Canadian Dollar gains against the US Dollar.

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Canadian Dollar Falls as GDP Decreases, Trump Tariff Threat Binds, and US Data Jumps

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  • July 31, 2025
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Canadian Dollar (CAD) continued its losing streak for a sixth straight day, falling to its lowest in over a month as a combination of home economic weakness, trade tensions, and robust U.S. data kept the currency under pressure. Canada’s GDP decreased 0.1% in May for the second consecutive month, with U.S. President Donald Trump warned Canadian goods not included in the USMCA of 35% tariffs if there is no agreement by August 1. While stronger-than-expected U.S. inflation and labor market figures further reinforced the U.S. Dollar, putting pressure on the CAD, investor sentiment towards the Canadian economy is still wary given trade tensions rising and economic momentum weakening. KEY LOOKOUTS • The markets are anxiously observing if a new trade agreement will be reached prior to Trump’s suggested tariff deadline, potentially having drastic effects on Canadian exports. • With consecutive GDP declines and increasing trade risks, additional rate cuts by the Bank of Canada are still in the picture if economic conditions worsen. • Ongoing U.S. inflation and labor data strength should continue to buoy the USD, with a potential short-term upside for the USD/CAD pair. • Canada’s foreign policy announcements, including its recent Palestinian statehood positions, may continue to put further stress on US-Canada relations and detract from CAD sentiment. The Canadian Dollar continues to struggle as a mix of soft domestic economic data, rising trade tensions with the U.S., and improved-than-anticipated American economic readings bear down on the currency. As Canada’s GDP fell for the second straight month and U.S. President Donald Trump gave warning of massive tariffs on Canadian exports if a new trade accord is not reached by August 1, investor attitudes have become increasingly risk-averse. While that was happening, firm U.S. inflation and labor data strengthened the Greenback, sending the USD/CAD pair to its highest level since late May. The Canadian Dollar is under ongoing pressure due to diminishing GDP, increasing trade tensions with the U.S., and robust American economic data. USD/CAD has rallied to a high in two months, with market attention on August 1 tariff imposition. • The Canadian Dollar has lost ground for six consecutive sessions, hitting a low since last month of May. • U.S. President Trump threatens 35% tariffs on Canadian items not included under USMCA if there is no agreement by August 1. • GDP of Canada fell 0.1% in May for the second month running. • The Bank of Canada left interest rates steady at 2.75% but indicated potential cuts in the event of an economic slowdown. • U.S. Core PCE Price Index increased 0.3% MoM in June, remaining above estimates and supporting concerns over inflation. • Initial jobless claims declined to 218K, indicating a strong labor market in the U.S. • Increasing geopolitical tension and uncertainty in trade keep weighing down investor sentiment in the Canadian Dollar. The Canadian Dollar is coming under increasing pressure as a combination of economic hardship and political uncertainty shrouds the future of Canada’s economy. The most recent GDP numbers announced a 0.1% loss in May, the second consecutive monthly drop, which indicates weakening momentum in major sectors. Meanwhile, relations with the United States have become increasingly strained. President Trump’s latest threat of deep tariffs against Canadian products beyond the USMCA has created apprehension of an impending trade war. The comments followed soon after Canada openly endorsed Palestinian statehood—a subject that has created more tension in diplomatic ties between the two countries. USD/CAD DAILY PRICE CHART SOURCE: TradingView Domestically, policymakers face a sensitive climate. The Bank of Canada left its benchmark interest rate unchanged but recognized ongoing inflation pressures and increased uncertainty related to trade. In the meantime, the United States keeps pumping out solid economic information, presenting another wrinkle for Canada’s economic planners. Consumer spending and income in the U.S. both posted gains, and unemployment claims were low, highlighting strong demand south of the border. As negotiations are ongoing and the deadline of August 1 draws closer, investors and policymakers alike are on tenterhooks, not knowing what the future holds for Canada’s trading future. TECHNICAL ANALYSIS The USD/CAD currency pair is trading at the doorstep of a critical resistance zone of 1.3830–1.3850, its highest level since May end. A break above this range in the long term would set the stage for a push towards the next resistance of 1.3900. Momentum indicators such as the Relative Strength Index (RSI) are heading towards the overbought zone, indicating some short-term consolidation or pullback potential. Overall, however, the trend remains bullish as long as the pair remains above the 1.3750–1.3780 support zone, with the buyers likely to continue dominating unless some fundamental shift takes place. FORECAST If trade tensions subside and the August 1 tariff imposition deadline slips by without imposition of fresh duties, the Canadian Dollar may recover some lost ground. Encouraging news in US-Canada trade negotiations, in conjunction with any indication of Canada’s economic statistics rebounding, can sustain a CAD rebound. Moreover, if the Bank of Canada provides a positive indication of future growth or inflation softening starts to materialize, it will be able to regain investor confidence and drive USD/CAD lower towards key levels of support. Still, if the U.S. imposes Trump’s suggested 35% tariffs, the Canadian economy might be put under further pressure, likely pushing the CAD lower. Persistent weakness in local data, especially if GDP deteriorates further or inflation accelerates unexpectedly, could heighten the chances of BoC rate cuts, again weighing on the currency. At the same time, if U.S. economic figures keep emerging strongly and risk appetite continues to remain weak, USD/CAD could post fresh highs and head towards 1.3900 or higher in the near future.

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USD/CAD Increases to 1.3750 as Trade Tensions and BoC Outlook Survey Expectations Intensify

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  • July 21, 2025
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USD/CAD currency pair moves higher towards 1.3750 during early European morning hours on Monday, bolstered by persistent US-Canada trade tensions as well as market caution in anticipation of the Bank of Canada’s Business Outlook Survey. The Canadian Dollar has difficulty gaining traction as investors weigh the risks of a possible 35% US tariff on Canadian imports, although diplomatic negotiations spearheaded by Canadian Prime Minister Mark Carney provide some hope. In a supporting role, firm crude Oil prices, driven by new EU sanctions against Russian supply, offer a possible support base for the CAD, which helps to cap the upside on the USD/CAD pair. KEY LOOKOUTS • Markets look to the BoC report for new economic sentiment and policy direction. • Attention is on possible 35% tariffs and eleventh-hour negotiations among Canadian and US authorities. • CAD could be supported by WTI Oil remaining close to $66 in light of EU sanctions on Russian Oil. • Market restraint keeps the US Dollar bid, putting additional upside pressure on USD/CAD. The USD/CAD pair is getting into gear, moving towards the 1.3750 level as investors are grappling with increased trade tensions between Canada and the US. Market players are keeping an eye on events related to the imposition of 35% US tariffs on Canadian products, with last-minute diplomatic efforts in place to minimize further dislocation. In the meantime, the Canadian Dollar continues to be under selling pressure, but stable Oil prices are providing some respite. All attention is on the Bank of Canada Business Outlook Survey due out soon, which may give the pair further guidance in the North American session. USD/CAD rises close to 1.3750 as US-Canada trade tensions and investor apprehension increase. Traders wait for the Bank of Canada’s Business Outlook Survey for new economic signals, while bullish crude Oil prices provide little support to the Canadian Dollar. • USD/CAD hovers at 1.3750, having recovered from recent losses against a backdrop of caution in the markets. • US-Canada trade tensions grow more heated, with threats of a 35% tariff on Canadian imports. • Canadian PM Mark Carney sends a trade envoy to Washington for last-ditch talks. • BoC Business Outlook Survey due, which is likely to shed important light on economic sentiment. • Crude Oil prices stable, with WTI at $66, underpinning the commodity-linked CAD. • EU’s 18th round of Russia sanctions contributes to worldwide supply worries, helping Oil prices. • US Dollar is supported by safe-haven flows, placing the USD/CAD pair on a strong trend. The USD/CAD currency exchange rate is presently driven by increased political and economic events between Canada and the United States. With the US threatening a tariff of 35% on Canadian imports, relations between the two countries are strained. In a move to preempt this, Canadian Prime Minister Mark Carney has dispatched a trade envoy to Washington with the aim of securing a deal before the imminent August 1 deadline. The diplomatic initiative has kindled guarded hope in the markets, with investors monitoring closely for any sign of movement in the trade talks that may affect cross-border trade and investor mood. USD/CAD DAILY PRICE CHART SOURCE: TradingView Besides trade dynamics, commodity prices, especially crude Oil, are also providing support to the Canadian Dollar. West Texas Intermediate (WTI) Oil is steady near $66 per barrel, thanks mainly to new European Union sanctions on Russian exports. The sanctions cover diminished price caps and stricter constraints on Moscow’s energy earnings. The Canadian economy, highly integrated with the energy exports, would gain from sustained Oil price strength, even while general uncertainties influence market performance. TECHNICAL ANALYSIS USD/CAD is demonstrating bullish sentiment as it trades at the 1.3750 resistance level, trying to bounce from its recent decline. The pair remains above its short-term moving averages, indicating underlying strength. An extended break above 1.3750 might trigger the way toward the 1.3800 psychological mark, with near-term support resting around 1.3700. Momentum indicators like the RSI continue to register in neutral-to-positive ground, suggesting room for further upside if bearish pressure continues. FORECAST If the tensions in trade relax through effective Canada-US negotiations, and the Bank of Canada’s Business Outlook Survey indicates the resilience of the economy, USD/CAD can continue its upward trend. A continued break above the 1.3750 level could drive the pair to the 1.3800 level and further, particularly if the US Dollar continues to be supported by safe-haven flows and firm economic data. Additional advances will also materialize if Oil prices plateau or fall, lowering support for the Canadian Dollar. Conversely, lack of an agreement on a trade deal by the August 1 deadline or a dovish sentiment in the BoC survey might put pressure on the Canadian Dollar. Yet, any substantial increase in crude Oil prices due to global supply worries or geopolitical tensions would assist the CAD in bolstering strength. In such a situation, USD/CAD can fall back towards the 1.3700 mark of support, with even more bearish potential in case the momentum is reversed in favor of the Canadian Dollar.

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USD/CAD Dives to 1.3640 as Trump’s Tariff Action Invites Dollar Weakness Pre-FOMC and Canadian Employment Report

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  • July 8, 2025
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USD/CAD currency pair plummeted to the vicinity of 1.3640 in Tuesday’s European session following a new series of 25% tariffs on imports from 14 nations led by prominent trade allies Japan and South Korea by former U.S. President Donald Trump. This action rekindled global trade tensions and put pressure on the US Dollar, wiping out some of its earlier gains. Market watchers now turn their attention to the next FOMC meeting minutes for cues on the Federal Reserve’s rate position and look forward to Canada’s labor market figures this Friday, which may affect the Bank of Canada’s future policy trajectory under signs of weakening employment conditions. KEY LOOKOUTS •  Tariffs of 25% on imports from 14 nations, such as Japan and South Korea, have sparked revived trade tensions, pressuring the US Dollar. •  The DXY sells weaker at 97.35 as the Greenback weakens as fears mount over the effect of tariffs on US importers and consumers. •  The market looks to Wednesday’s publication of the FOMC meeting minutes for hints at the Fed’s interest rate perspective following its June policy pause. •  Market attention is on Friday’s Canadian employment report, which could see rising Canadian unemployment weigh on the BoC’s next rate decision. USD/CAD currency pair fell close to 1.3640 on Tuesday after market sentiment grew cautious due to Donald Trump’s revelation of new 25% tariffs on imports from 14 countries, including Japan and South Korea. The revived trade tensions have triggered a sell-off of the US Dollar, unwinding some of Monday’s gains. While investors are still absorbing the potential economic implications of the tariffs, attention now turns to the upcoming release of FOMC meeting minutes for clues about the Federal Reserve’s policy intentions and Friday’s Canadian employment report, which will help direct expectations about future Bank of Canada action. USD/CAD fell to about 1.3640 following Trump’s imposition of additional tariffs on major trade partners, such as Japan. The US Dollar fell as trade tensions grew, with markets looking forward to FOMC minutes and Canadian employment data for policy signals. • USD/CAD fell to 1.3640 in Tuesday’s European session with renewed trade anxiety. • Donald Trump laid down 25% tariffs on imports from 14 nations, including Japan and South Korea. • The US Dollar Index (DXY) dipped to nearly 97.35 as the Greenback weakened. • Trade tensions returned, with worries over their effects on US consumers and inflation. • FOMC minutes due on Wednesday are awaited by investors to see what interest rate direction the Fed will take. • Friday’s Canadian labor data will indicate increasing unemployment, which could affect BoC policy. • Market sentiment is still guarded, with focus divided between US monetary indicators and Canadian economic news. The news from former U.S. President Donald Trump that there are to be new tariffs of 25% on 14 countries, including top trading partners Japan and South Korea, has reawakened global trade tensions. The surprise action has raised investors’ worries about the wider implications for global trade and inflation. With Washington and Tokyo negotiating constantly, the hasty tariff imposition makes people wonder about the stability of trade ties and possible countermeasures. It also focuses attention on how such policy shifts may affect economic growth and consumer prices in the United States. USD/CAD DAILY PRICE CHART SOURCE: TradingView At the same time, markets are keeping a close eye on the imminent release of key economic indicators that may dictate monetary policy decisions by both the U.S. and Canada. The FOMC minutes release will provide clues on why the Federal Reserve decided to leave interest rates steady for the fourth straight meeting. In Canada, the June labor market report is eagerly anticipated, and expectations are for unemployment to rise slightly. Such events will be important in framing market sentiment and central bank policies in the upcoming weeks. TECHNICAL ANALYSIS USD/CAD pair has fallen back towards the 1.3640 mark, a very important short-term support level. A continued dip below this level would open up the next support around 1.3600, with a bounce potentially getting stopped at the 1.3700 psychological level. Momentum oscillators like the Relative Strength Index (RSI) indicate a faltering bullish inclination, which could lead to consolidation or further bearish pressure. Traders will be monitoring price activity on these important levels, particularly ahead of macroeconomic announcements slated to fuel volatility. FORECAST In the short term, USD/CAD can continue to dip further if trade tensions intensify or if the next Canadian labor market report surprises upwards. A better-than-expected employment report has a high likelihood of sending the Canadian Dollar higher, maybe even causing the pair to dip below the 1.3600 support. Also, any indication from the FOMC minutes that the Federal Reserve will take a more dovish approach in its future decisions can weaken the US Dollar further, creating even more bearishness for the pair. On the positive side, if Canadian employment data turn out weaker or FOMC minutes hint at a more aggressive tone than expected, USD/CAD may get a bid and bounce up to the 1.3700 level of resistance. Ongoing uncertainty in international trade and a possible reversal in investor sentiment in favor of safe-haven assets can also offer some support for the US Dollar, capping downside potential in the near term. Overall, the currency pair is likely to continue being volatile as markets respond to economic indicators and geopolitical events.

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USD/CAD Forecast: Bearish Momentum Continues Below 1.3750 on Dovish Fed and Geopolitical Quietness

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  • June 24, 2025
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USD/CAD currency pair remains in a bearish tendency, trading close to 1.3720 during early European trading on Tuesday. The downward trend is fueled by a weaker US Dollar, under pressure due to a truce between Iran and Israel as well as dovish utterances from the US Federal Reserve, with Fed Governor Michelle Bowman suggesting that the Federal Reserve might cut interest rates in July. Technically, the pair is still below the 100-day EMA and bears bearish momentum with the RSI in the low zone. Critical support is at 1.3635, while resistance is at 1.3820, maintaining the bearish outlook in place unless a decisive breakout above key resistance levels. KEY LOOKOUTS • A break below this level may trigger further decline to 1.3575 and 1.3540. • The pair has to break this level in order to test higher resistance at 1.3862 and 1.3935. • Being below the 100-day EMA and the RSI below 50 implies persistent bearish pressure. • Any additional indications of Fed rate cuts would bear down on the US Dollar and add to CAD strength. The USD/CAD currency pair is still under bearish pressure as it hovers close to 1.3720 in early European trade, pressured by dovish comments from the US Federal Reserve and de-escalation of geopolitical tensions in the Middle East. A short-term ceasefire between Iran and Israel has curbed safe-haven demand for the US Dollar, while Fed Governor Michelle Bowman’s mention of a possible July rate cut has contributed to weakness in USD. Technically, the pair remains below the 100-day EMA and the RSI is below the neutral 50 mark, adding credence to a bearish bias. Traders are watching the pivotal support level of 1.3635, with more significant downside risks on a break below this zone. USD/CAD is trading around 1.3720 in a bearish fashion with a weaker US Dollar and dovish Fed cues. The pair remains below the 100-day EMA, and the support is at 1.3635 while the resistance is at 1.3820. Breaking below support may lead to further losses down to 1.3575. • USD/CAD is trading around 1.3720 in early European trading, and it continues to be in a bearish mood. •  The pair remains below the 100-day Exponential Moving Average, indicating bearish pressure. • RSI lingers below the 50 level, supporting weak bullish momentum. • Fed Governor Michelle Bowman suggested a potential July rate cut, pressuring the US Dollar. • Geopolitical tensions subside as Iran-Israel ceasefire comes into effect, cutting safe-haven demand. • Support is at 1.3635, then 1.3575 and 1.3540 on sustained losses. • The resistance is at 1.3820; breaking above it could pave the way to 1.3862 and 1.3935. The USD/CAD pair is under pressure following the changing geopolitical and monetary policy trends. An agreement for a ceasefire between Israel and Iran has mitigated market tensions, leading to moving away from safe-haven currencies such as the US Dollar. This development has benefited commodity currencies such as the Canadian Dollar, particularly as global energy markets react to lower supply disruption risk. The diplomatic progress has introduced some stability into markets, which has enabled investors to begin to concentrate once again on economic fundamentals and central bank cues. USD/CAD DAILY PRICE CHART SOURCE: TradingView Compounding the US Dollar’s weakness are dovish indications emanating from the Federal Reserve. Fed Governor Michelle Bowman’s rhetoric hinting at a willingness to cut rates in July has fueled hopes of a more accommodative policy. The change of tone is weakening demand for the Greenback and adding to the Canadian Dollar’s strength. As sentiment adjusts to the prospect of lower US interest rates and diminished geopolitical risk, USD/CAD can continue to be pressured unless later economic data turns the outlook drastically. TECHNICAL ANALYSIS USD/CAD has a bearish inclination as it moves below the 100-day Exponential Moving Average (EMA), which is one of the most important medium-term trend direction indicators. The 14-day Relative Strength Index (RSI) is also below the middle of the neutral 50 level at 47.75, indicating diminishing bullish momentum. The pair is immediately supported at 1.3635, the June 18 low, then at 1.3575 just below the lower Bollinger Band and 1.3540, the June 16 low. On the other side, resistance is at 1.3820, consistent with the upper Bollinger Band. An extended advance above this level may set the stage for a challenge of 1.3862 and possibly the 100-day EMA at 1.3935. FORECAST The USD/CAD currency pair is expected to stay pressured if it remains below the 100-day EMA and is unable to regain buying momentum. Breakout below the near-term support of 1.3635 may initiate further losses to 1.3575, which serves as the lower edge of the Bollinger Band. Should bearish sentiment continue, the next substantial support is at 1.3540, the low made on June 16. Further US Dollar weakness on account of dovish Fed rhetoric and calm geopolitical tensions could speed up the breakdown move. Conversely, a rebound above the 1.3820 resistance level would alter the mood toward a short-term bullish reversal. If the duo is able to hold above this area, it can draw buying interest and move towards 1.3862, the May 29 high. Another break above it could set the stage towards the pivotal 100-day EMA level of 1.3935. Upside risk, though, remains limited unless backed by a more robust US Dollar or a change in risk appetite.

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