USD/CAD Price Forecast: Wobbles around 1.3850 ahead of BoC-Fed policy outcome

USD/CAD ticks higher to near 1.3850 despite slight weakness in the US Dollar.
Investors await BoC-Fed monetary policy announcements.
The BoC is expected to leave interest rates steady, while the Fed is almost certain to lower them.

Sagar Dua FXStreet

The USD/CAD pair trades marginally higher around 1.3850 during the European trading session on Wednesday. The Loonie pair consolidates as investors await the monetary policy by the Bank of Canada (BoC) and the Federal Reserve (Fed), which will be announced later in the day.

The BoC is expected to keep interest rates on hold at 2.25% as recent Canadian employment prints have shown signs of strong job creation in the September-November period, following lay-offs in July and August.

Meanwhile, the Fed is almost certain to cut the Federal Funds Rate by 25 basis points (bps) to 3.50%-3.75% amid weak United States (US) labor market conditions. The major highlight of the Fed’s policy will be fresh monetary policy guidance for 2026.

According to the CME FedWatch tool, there is a 58% chance that the Fed will cut borrowing rates at least two times through October 2026.

Ahead of the Fed’s monetary policy, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.1% lower to near 99.10.

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Swiss Franc.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.13%	-0.10%	-0.05%	0.04%	-0.10%	-0.05%	-0.14%
EUR	0.13%		0.03%	0.07%	0.18%	0.02%	0.08%	-0.01%
GBP	0.10%	-0.03%		0.04%	0.14%	-0.01%	0.05%	-0.04%
JPY	0.05%	-0.07%	-0.04%		0.10%	-0.05%	-0.01%	-0.09%
CAD	-0.04%	-0.18%	-0.14%	-0.10%		-0.14%	-0.11%	-0.18%
AUD	0.10%	-0.02%	0.00%	0.05%	0.14%		0.06%	-0.03%
NZD	0.05%	-0.08%	-0.05%	0.01%	0.11%	-0.06%		-0.09%
CHF	0.14%	0.01%	0.04%	0.09%	0.18%	0.03%	0.09%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

USD/CAD daily chart

USD/CAD trades near 1.3850 during the European trading session on Wednesday. The pair has remained below the 200-day Exponential Moving Average (EMA) at 1.3912, keeping bears in control. The 200-day EMA has flattened after a prior grind higher, pointing to waning trend strength. Failure to reclaim the 200-day EMA would continue to pressure the downside.

The 14-day Relative Strength Index (RSI) at 35 (bearish) stays above oversold, demonstrating weak upside momentum.

Below the 200-day EMA, the path of least resistance remains lower, with rallies capped by that dynamic barrier. A daily close back above the average would neutralize the immediate bearish tone and open the door for a broader recovery towards the December 4 high of 1.3977. RSI would need to reclaim 50 to validate an improvement in momentum. On the downside, the August 7 low at 1.3720 will remain a key demand area.

(The technical analysis of this story was written with the help of an AI tool.)

Economic Indicator

Fed Interest Rate Decision

The Federal Reserve (Fed) deliberates on monetary policy and makes a decision on interest rates at eight pre-scheduled meetings per year. It has two mandates: to keep inflation at 2%, and to maintain full employment. Its main tool for achieving this is by setting interest rates – both at which it lends to banks and banks lend to each other. If it decides to hike rates, the US Dollar (USD) tends to strengthen as it attracts more foreign capital inflows. If it cuts rates, it tends to weaken the USD as capital drains out to countries offering higher returns. If rates are left unchanged, attention turns to the tone of the Federal Open Market Committee (FOMC) statement, and whether it is hawkish (expectant of higher future interest rates), or dovish (expectant of lower future rates).

EUR/USD looks to regain the 200-day SMA

EUR/USD regains some balance and trade just above 1.1600 the figure ahead of the opening bell in Asia. The pair initially dipped to the 1.1530 zone for the first time since November, always following the stronger US Dollar and the marked flight-to-safety in the context of the ongoing Middle East crisis

GBP/USD attacks 1.3300, refreshing three-month lows

GBP/USD is deep in the red near 1.3300, accelerating its downside to renew three-month lows in European trading on Tuesday. The ongoing escalation in the Iran war, combined with rising Oil prices, weighs negatively on the higher-yielding Pound Sterling as the US Dollar capitalizes on increased haven demand.

Gold bounces off lows, back above $5,100

Gold remains on the defensive, eroding part of the recent multi-day advance and managing to trade back above the $5,100 mark per troy ounce on Tuesday. The precious metal initially dropped just below the critical $5,000 threshold on the back of the persistent strength of the Greenback, higher US Treasury yields across the curve and investors' repricing of Fed rate cuts.