USDCAD forecast highlights
- USDCAD broke through 1.40 to rest at 15-month high
- Investors favouring USD due to America’s macro outperformance
- A more hawkish Fed may push USDCAD higher
How has USDCAD performed recently?
Despite a catalog of unpredictable policies coming out of the White House, the US dollar has not really suffered any consequences this year. In fact, against the C$, prices have gone in its favour.
In the past eight weeks, USDCAD chart reasserted the long-term uptrend. Prices first affirmed the lower side of its long-term range support at 1.350. Then, it broke above the 3Q’25 resistance highs. The rate is currently sitting near the 15-month peak (see below).
Why is the rate favouring the US Dollar? The first reason is C$ weakness. Note when we talk about the exchange rate it is all about relative comparison. The domestic Canadian economy is suffering from excess capacity and weak economic growth. Because of this, the central bank of Canada has refrained from tightening.
The American economy, on the other hand, is still growing reasonably fast. Unemployment rate (nonfarm payroll) remains firm; while its GDP growth this year is set to outrun every other G7 member by a mile.
Moreover, Wall Street is extremely buoyant this year (note, eg, SpaceX‘s recent IPO). The extraordinary wealth effect from the booming Silicon Valley is still propping up the economy. And this self-reinforcing trend remains intact.
The USD is basking in higher demand because of these reasons. Speculative capital is flowing to the country.
Chartwise, however, the rally in USDCAD is modestly overbought. A small retracement around the resistance area (1.410) is possible. Traders may test the former resistance and see if that level holds as support.
Is it a good time to buy US dollars from Canadian Dollars?
The Canadian dollar is weakening. This makes buying USD more expensive.
The question is whether we should buy some US$ now? The answer is yes if you do need some greenbacks in the near term.
Of course, you may wish to wait a while longer to attain better FX rates. A further decline below 1.400 is possible. But I wouldn’t pin too much hope of this happening over the next few days. The trend here is for USD-strength. So any setback near 1.400 should be taken advantage of.
Will USD get stronger against CAD?
2026 is becoming a good year for the US economy and its domestic asset market.
This is despite the inflationary Iranian-conflict that shut down most of the oil traffic around the Strait of Hormuz. Oil prices rose to $120 in March before falling back below $70 recently.
According to the US Treasury secretary Scott Bessent, the US is expected to grow 3% this year. This is a really excellent figure and far outpaces many of the developed economies around the world. The UK, for example, is only expected to grow only a third of that figure. Germany and Japan are expected to underperform too.
With such a strong momentum behind the world’s largest economy, the risk is gradually skewed towards inflation.
The latest price change index (PCE Index), for example, hovers above the 4 percent mark. This is the highest level since 2023, suggesting entrenched inflationary pressure in the economy. While oil prices have dropped markedly, it will take time to realise its deflationary impact.
In the latest FOMC statement released in June, the US central bank is clearly worried about this burgeoning inflation risk:
Inflation remains elevated relative to the Committee’s 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy. The Committee will deliver price stability.
This potentially means a more hawkish interpretation of the economic picture. In turn, the USD may strengthen if traders suspect that the Fed may hike rates in the next few quarters.
What is the USDCAD forecast in weeks?
Most brokers are downbeat on the USDCAD. As you can see from the range of forecast below, most predict the rate to drop sharply in the weeks ahead.
The rally to 1.420, it seems, is unsustainable. In a year’s time, the USD-C$ may even touch 1.300 (see below).
Is this a realistic scenario? In financial markets, many trends have developed far beyond anyone’s wildest expectations. But for USDCAD to fall like that requires a big improvement to CAD outlook and a wholesale exit out of USD. This is not happening right now and I suspect macro economic conditions have to change further before this downward move will materialise.
Source: ExchangeRates.org.uk (Jul2026)
Jackson is a core part of the editorial team at GoodMoneyGuide.com.
With over 15 years of industry experience as a financial analyst, he brings a wealth of knowledge and expertise to our content and readers.
Previously, Jackson was the director of Stockcube Research as Head of Investors Intelligence. This pivotal role involved providing market timing advice and research to some of the world’s largest institutions and hedge funds.
Jackson brings a huge amount of expertise in areas as diverse as global macroeconomic investment strategy, statistical backtesting, asset allocation, and cross-asset research.
Jackson has a PhD in Finance from Durham University and has authored over 200 guides for GoodMoneyGuide.com.
