US Dollar Forecast: USD/CAD Pulls Back Ahead of December High
US Dollar Outlook: USD/CAD
USD/CAD extends the decline from the start of the week amid the failed attempt to test the December high (1.3620), but the exchange rate may track the positive slope in the 50-Day SMA (1.3502) if it continues to hold above the moving average.
US Dollar Forecast: USD/CAD Pulls Back Ahead of December High
USD/CAD is back under pressure after retracing the decline following the Federal Reserve interest rate decision, and the exchange rate may continue to pull back from the monthly high (1.3614) as it initiates a series of lower highs and lows.
Join David Song for the Weekly Fundamental Market Outlook webinar. David provides a market overview and takes questions in real-time. Register Here
In turn, USD/CAD may face a further decline over the remainder of the week on the back of US Dollar weakness, but developments coming out of the US may sway the exchange rate as the Federal Open Market Committee (FOMC) endorses a data dependent approach in managing monetary policy.
US Economic Calendar
The update to the Personal Consumption Expenditure (PCE) Price Index, the Fed’s preferred gauge for inflation, may force Chairman Jerome Powell and Co. to keep US interest rates higher for longer as both the headline and core rate are projected to hold steady in February.
Signs of sticky inflation may generate a bullish reaction in the Greenback as it limits the Fed’s scope to unwind its restrictive policy, but an unexpected downtick in the PCE index may keep USD/CAD under pressure as it encourages the Federal Open Market Committee (FOMC) to deliver a rate cut sooner rather than later.
With that said, USD/CAD may face a further decline over the remainder of the month as it initiates a series of lower highs and lows, but the exchange rate may stage further attempts to test the December high (1.3620) should it track the positive slope in the 50-Day SMA (1.3502).
USD/CAD Price Chart –Daily
Chart Prepared by David Song, Strategist; USD/CAD Price on TradingView
- USD/CAD appeared to be on track to test the December high (1.3620) after clearing the February high (1.3606), but the exchange rate may track the monthly range as it continues to hold below 1.3630 (38.2% Fibonacci retracement).
- The recent series of lower highs and lows may push USD/CAD towards the 50-Day SMA (1.3502), with a breach below 1.3440 (23.6% Fibonacci retracement) bringing the monthly low (1.3420) on the radar.
- However, USD/CAD may stage further attempts to test the December high (1.3620) should it track the positive slope in the moving average, with a break/close above 1.3630 (38.2% Fibonacci retracement) opening up 1.3810 (161.8% Fibonacci extension).
Additional Market Outlooks
US Dollar Forecast: USD/JPY Struggles to Test November High
GBP/USD Forecast: Pound Susceptible to Test of Monthly Low After BoE
--- Written by David Song, Strategist
Follow on Twitter at @DavidJSong
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.
FOREX.com is a registered FCM and RFED with the CFTC and member of the National Futures Association (NFA # 0339826). Forex trading involves significant risk of loss and is not suitable for all investors. Full Disclosures and Risk Warning. Increased leverage increases risk.
GAIN Capital Group LLC (dba FOREX.com) 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA. GAIN Capital Group LLC is a wholly-owned subsidiary of StoneX Group Inc.
© FOREX.COM 2025