USD/CAD Forecast and News


USD/CAD trades flat ahead of Fed rate decision and Powell’s remarks

Bank of Canada’s Macklem may shift CAD outlook with comments on tariffs, inflation risks, and economic momentum. The Loonie remains vulnerable with monetary policy divergence in focus. Fed projections and Powell’s tone may influence the direction of the Greenback and bets on a September rate cut.

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EUR/USD stalls below 1.1500 as Fed holds, Trump comments lift Dollar

EUR/USD stalls below 1.1500 as Fed holds, Trump comments lift Dollar

The EUR/USD trades almost flat after climbing past the 1.1500 figure, following the Federal Reserve's decision to hold rates unchanged, amid increasing tensions in the Middle East. This, along with comments from US President Donald Trump, boosted the Dollar, capping the Euro’s advance. 

GBP/USD weakens further, confronts 1.3400

GBP/USD weakens further, confronts 1.3400

GBP/USD is currently under increasing selling pressure, testing the 1.3400 support level on Wednesday, amidst a robust recovery in the Greenback following the Fed's decision to maintain rates and Chief Powell's hawkish remarks during his press conference.

USD/JPY drops as dovish Fed projections weigh on yields and focus shifts to Powell

USD/JPY drops as dovish Fed projections weigh on yields and focus shifts to Powell

Fed holds rates steady, signals two cuts this year. The 2-year yield slipped nearly 5 basis points to 3.9%, pulling USD/JPY lower by 0.45% on the day toward 144.50. Traders look to Fed Chair Jerome Powell for clarity on the rate path amid uncertainty over inflation, fiscal policy, and tariffs.

Gold loses the grip, breaks below $3,400

Gold loses the grip, breaks below $3,400

Gold now turns negative after breaching below the key $3,400 mark per troy ounce on Wednesday, all in response to the hawkish message from Chair Powell after the Fed’s steady hand at its gathering.

WTI Oil price holds gains near $74.00, boosted by rising geopolitical risks

WTI Oil price holds gains near $74.00, boosted by rising geopolitical risks

Fears that the US might get involved in the Middle East war are buoying Oil price. Crude Oil futures are rallying on concerns about supply disruptions. Iran's ambassador to the UN has vowed a strong response if the US gets involved in the war.

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USD/CAD YEARLY FORECAST

How could USD/CAD move this year? Our experts make a USD/CAD update forecasting the possible moves of the Canadian dollar (CAD) - US dollar (USD) pair during the whole year. Don't miss our 2025 USD/CAD forecast!

USD/CAD 2025 FORECAST

In the USD/CAD 2025 Forecast, FXStreet analyst Joshua Gibson suggests uncertainty and risk-off sentiment could strengthen the US Dollar (USD) early in 2025, while the Canadian Dollar (CAD) is expected to weaken in the first quarter. However, CAD investors may reassess prospects as the year progresses, focusing on the Federal Reserve (Fed) - Bank of Canada (BoC) policy dynamics.

From a technical point of view, USD/CAD could face a technical ceiling near the 1.4400 level after the Canadian Dollar's sharp 8.5% decline in 2024 sent the pair to 56-month highs. However, technical indicators like the MACD suggest caution, as short positions may only become viable once clear sell signals emerge, likely during the first quarter.

Read the full 2025 forecast.

MOST INFLUENTIAL FACTORS IN 2025 FOR USD/CAD

The year will be politically marked by Trump’s return to the White House. A Republican government is seen as positive for financial markets, but Trump’s pledge to cut taxes and impose tariffs on foreign goods and services may introduce uncertainty to both the political and economic landscape.

Canada’s political crisis peaked in late 2024 with a no-confidence vote against Prime Minister Justin Trudeau, leading to snap elections and a weakened Liberal minority government. Policy uncertainty and economic challenges dominate 2025’s outlook, raising concerns over market stability and investor confidence.

The BoC is set to continue easing interest rates through 2025, at least at a faster pace than the Fed is expected to, which could apply pressure on CAD’s already-rising rate differential.


INFLUENTIAL ORGANIZATIONS AND PEOPLE FOR THE USD/CAD

Bank of Canada (BoC)

The Bank of Canada (BoC) is the nation's central bank. Its principal role, as defined in the Bank of Canada Act, is "to promote the economic and financial welfare of Canada." The bank's responsibilities are divided into four main areas:

The Bank of Canada (BoC) sets interest rates and manages monetary policy at eight scheduled meetings a year and ad hoc emergency meetings that are held as required. The BoC's primary mandate is to maintain price stability, which means keeping inflation at between 1-3%. Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Canadian Dollar (CAD) and vice versa. Other tools used include quantitative easing and tightening.

The Federal Reserve (Fed)

The Federal Reserve (Fed) is the central bank of the United States (US) and it has two main targets: to maintain the unemployment rate at its lowest possible levels and to keep inflation around 2%. The Federal Reserve System's structure is composed of the presidentially appointed Board of Governors and the partially appointed Federal Open Market Committee (FOMC). The FOMC organizes eight scheduled meetings in a year to review economic and financial conditions. It also determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. The FOMC Minutes, which are released by the Board of Governors of the Federal Reserve weeks after the latest meeting, are a guide to the future US interest-rate policy.


Jerome Powell

Jerome Powell took office as chairman of the Board of Governors of the Federal Reserve System in February 2018, for a four-year term ending in February 2022. He was sworn in on May 23, 2022, for a second term as Chairman ending May 15, 2026. Born in Washington D.C., he received a bachelor’s degree in politics from Princeton University in 1975 and earned a law degree from Georgetown University in 1979. Powell served as an assistant secretary and as undersecretary of the Treasury under President George H.W. Bush. He also worked as a lawyer and investment banker in New York City. From 1997 through 2005, Powell was a partner at The Carlyle Group.

Tiff Macklem

Tiff Macklem was born in Montreal, Quebec, in 1961. He was appointed Governor of the Bank of Canada effective June 3, 2020, for a seven-year term. He graduated from Queen's University with a bachelor's degree in economics and completed a master's degree and a PhD in economics, both from the University of Western Ontario.

Before becoming Governor, Macklem served as a director of the Bank of Nova Scotia and chair of its risk committee. He is chair of the Group of Governors and Heads of Supervision, the oversight body of the Basel Committee on Banking Supervision, and co-chair of the Financial Stability Board's Regional Consultative Group for the Americas.

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About USD/CAD

The USD/CAD represents how many Canadian Dollars (the quote currency) are needed to purchase one US Dollar (the base currency). The nickname “Loonie” originates from the Gold-colored Canadian one-dollar coin introduced in 1987 and produced by the Royal Canadian Mint in Winnipeg.
The coin reverse features a common loon, a bird found throughout Canada, while the obverse displays the portrait of Queen Elizabeth II, the nation's former head of state.

THE IMPORTANCE OF OIL FOR THE ‘LOONIE’

The USD/CAD is one of the three “commodity pairs”, alongside AUD/USD and NZD/USD. These pairs are closely tied to commodity price fluctuations, particularly Oil.

Canada, known as a resource-based economy, is a major producer and supplier of Oil. Its leading export market is the United States, making the Canadian dollar (CAD) particularly sensitive to US consumption data and economic health.

Rising Oil prices typically have a negative effect on the USD and a positive effect on the CAD.

ASSETS THAT INFLUENCE USD/CAD THE MOST

  • Commodities: As previously mentioned, Oil is the primary focus, but traders should also consider Gold and Natural Gas.
  • Currencies: The Japanese Yen (JPY) and the Euro (EUR). Another important group of influent pairs includes: EUR/USD, GBP/USD, USD/JPY, AUD/USD, USD/CHF and NZD/USD.
  • Bonds: CSB (Canada Savings Bonds), CPB (Canada Premium Bonds) and T-Note 10Y (10-year US Treasury note).
  • Bonds: CSB (Canada Savings Bonds), CPB (Canada Premium Bonds) and T-Note 10Y (10-year US Treasury note).