USD/CAD: Choppy range then softer bias – TD Securities

FXStreet Insights Team FXStreet

TD Securities analysts expect a broadly neutral near-term impact on the Canadian Dollar (CAD) from a more balanced Bank of Canada (BoC) tone. With USD/CAD trading back near pre-conflict levels, they see the pair fluctuating around current levels through Q2 2026 before gradually moving lower toward 1.34 by year-end as their bearish USD view plays out.

TD sees range trade then gradual CAD gains

"Risks to Canada's outlook are more two-sided now, allowing the BoC to strike a more neutral tone with limited CAD impact. We expect USD/CAD to chop around current levels through Q2 before eventually trending lower into H2 toward 1.34."

"Risks to the Canadian outlook appear more balanced and two-sided now which should allow the BoC to keep a more cautiously neutral outlook without signaling the need for any imminent action. Against this backdrop, a more balanced tone—compared to the otherwise dovish communication we have seen from the BoC this year, should have a more muted impact on the CAD."

"With USD/CAD back around pre-conflict levels and market putting peak geopolitical shock and uncertainty premia behind, we expect the USD/CAD to be choppy and trade around current levels through Q2."

"We maintain our bearish USD lean in 2026 and see USD/CAD falling to 1.34 by year-end. USMCA poses an asymmetric risk for USD/CAD in our view – a deal in place is likely to lift CAD sentiment and positioning positively a lot more than lack of a deal. We expect USMCA compliant goods to remain exempt from tariffs irrespective of a deal."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD flatlines near 0.6965 as less hawkish RBA counters USD weakness

AUD/USD holds steady above a two-week low, trading near 0.6965 in the Asian session on Wednesday as early midterm election results heighten political uncertainty and weigh heavily on the US Dollar. Moreover, reviving safe-haven demand triggers a fresh leg down in US bond yields, offsetting Fed hike bets and exerting additional pressure on the buck. However, a less hawkish RBA caps the Aussie.

USD/JPY declines below 158.00 as USD weakens on midterm election results

USD/JPY comes under heavy selling pressure on Wednesday, dropping below 158.00 during the Asian session as the US Dollar slumps to a one-month low amid heightened political uncertainty after early US midterm vote counts. Moreover, the prospect of gridlock in Washington drives safe-haven flows, triggering a fresh leg down in US bond yields and further weighing on the buck.

Gold clings to gains near weekly top, comfortably above $4,000 as US elections hit USD

Gold clings to strong intraday gains near the weekly high, trading comfortably above the $4,000 psychological mark during early European session amid a broadly weaker US Dollar. Democrats’ wins in the House and Senate raise the prospect of gridlock in Washington. Moreover, heightened political uncertainty drove investors to safe-haven assets, exerting downward pressure on US bond yields. This is seen weighing on the Greenback and supporting the precious metal.

Bitcoin tests critical support, Ethereum struggles below resistance, XRP extends losses

Bitcoin (BTC), Ethereum (ETH) and Ripple (XRP) remain under pressure on Wednesday as bearish momentum continues to weigh on prices. BTC approaches key support around $76,466, and a decisive close below could open the door to deeper losses. Meanwhile, ETH struggles below key resistance while XRP faces rejection at the upper trendline of a falling channel pattern, all hinting at deeper losses.

US Dollar Index dives to late September lows near 101.25 on US election results

The US Dollar Index, which tracks the Greenback against a basket of currencies, comes under intense selling pressure during the Asian session on Wednesday, dropping to its lowest level since late September as early US midterm election results heightened political uncertainty.

The 2% inflation target came from a throwaway remark. It now moves trillions

The Federal Reserve's 2% inflation goal grew out of an off-the-cuff remark by a New Zealand politician in 1988. Bond investors still price long-term US debt as if 2% holds, so a change in how the Fed measures inflation would move markets.