USD/CAD sees more downside below 1.3750 as traders assess Fed’s outlook for 2026

USD/CAD struggles to hold ground near its almost three-month low of 1.3750.
US President Trump wants the Fed to deliver more interest rate cuts.
Investors await Canadian inflation and the US NFP data for November.

Sagar Dua FXStreet

The USD/CAD pair trades vulnerably near its almost three-month low around 1.3750 during the late Asian trading session on Monday. The Loonie pair has been under pressure, struggling to regain ground as the US Dollar (USD) underperforms, with investors assessing the United States (US) interest rate outlook for 2026.

During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades with caution near its eight-week low of 98.13 posted on Thursday.

US Dollar Price Last 7 Days

The table below shows the percentage change of US Dollar (USD) against listed major currencies last 7 days. US Dollar was the weakest against the Swiss Franc.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.74%	-0.24%	-0.11%	-0.47%	-0.12%	-0.14%	-0.98%
EUR	0.74%		0.54%	0.69%	0.32%	0.68%	0.65%	-0.20%
GBP	0.24%	-0.54%		0.17%	-0.22%	0.14%	0.11%	-0.73%
JPY	0.11%	-0.69%	-0.17%		-0.36%	0.00%	-0.02%	-0.85%
CAD	0.47%	-0.32%	0.22%	0.36%		0.36%	0.34%	-0.53%
AUD	0.12%	-0.68%	-0.14%	-0.00%	-0.36%		-0.03%	-0.87%
NZD	0.14%	-0.65%	-0.11%	0.02%	-0.34%	0.03%		-0.84%
CHF	0.98%	0.20%	0.73%	0.85%	0.53%	0.87%	0.84%

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).

According to the CME FedWatch tool, there is a 64.3% chance that the Fed will cut interest rates at least two times by the end of 2026. While the Fed’s dot plot showed that policymakers see the Federal Fund Rate falling to 3.4% by 2026, indicating one more interest rate cut from current levels of 3.50%-3.75%.

Fed dovish expectations are prompted by weak United States (US) labour market conditions, and the continuous endorsement for more interest rate cuts by President Donald Trump. Last week, White House spokeswoman Karoline Leavitt stated that the President was pleased to see the 25-basis-point (bps) interest rate reduction, but he thinks more should be done.

For fresh cues on the current state of the US employment, investors await the Nonfarm Payrolls (NFP) data for November, which will be released on Tuesday.

Meanwhile, the Canadian Dollar (CAD) trades firmly against its peers from the past few trading days on expectations that the Bank of Canada (BoC) is done with reducing interest rates in the near term. In the monetary policy statement last week, the BoC reiterated that the “current rate is at about the right level to keep inflation close to 2%” as long as the “economy and inflation evolve in line with projections”.

In Monday’s session, the Canadian Dollar will be influenced by the Consumer Price Index (CPI) data for November, which will be published at 13:30 GMT. The headline CPI is expected to grow at a faster pace of 2.4% year-on-year against 2.2% in October.

Economic Indicator

Consumer Price Index (YoY)

The Consumer Price Index (CPI), released by Statistics Canada on a monthly basis, represents changes in prices for Canadian consumers by comparing the cost of a fixed basket of goods and services. The YoY reading compares prices in the reference month to the same month a year earlier. Generally, a high reading is seen as bullish for the Canadian Dollar (CAD), while a low reading is seen as bearish.

EUR/USD looks vacillating around 1.1800

EUR/USD alternates gains with losses around the 1.1800 neighbourhood amid marginal gains at the end of the week. The pair’s tepid move higher comes against the backdrop of a generalised lack of direction in the FX galaxy and the irresolute price action in the US Dollar.

GBP/USD slips back to daily lows near 1.3450

GBP/USD trades on the back foot on Friday, adding to Thursday’s losses around the 1.3450 region. Cable’s move lower comes amid the lacklustre performance of the Greenback in a context of a wide spread absence of volatility.

Gold flirts with four-week highs past $5,200

Gold adds to the ongoing recovery, up for the third day in a row and surpassing the $5,200 mark per troy ounce on Friday. The relentless uptick in the precious metal remains bolstered by steady geopolitical tensions and persistent uncertainty surrounding the US trade policy.

Bitcoin, Ethereum and Ripple consolidate with short-term cautious bullish bias

Bitcoin, Ethereum and Ripple are consolidating near key technical areas on Friday, showing mild signs of stabilization after recent volatility. BTC holds above $67,000 despite mild losses so far this week, while ETH hovers around $2,000 after a rejection near its upper consolidation boundary.

Changing the game: International implications of recent tariff developments

The Supreme Court ruling on International Emergency Economic Powers Act (IEEPA) tariffs provides limited relief for the rest of the world, with weighted average tariff rates modestly lower.

Starknet unveils strkBTC, shielded Bitcoin transactions on Ethereum Layer 2

Starknet, the Ethereum Layer 2 network developed by StarkWare, today announced strkBTC, a wrapped Bitcoin asset that introduces optional shielding while preserving full DeFi composability.