CAD/USD Forecast

Alongside American and Australian dollars, the Canadian dollar is one of the top choices for trading on forex or investing. USD/CAD is among major traders’ instruments, so it’s no wonder the pair is prone to volatility. Are you planning to capitalize on it through investments or by means of short-term deals? Then it’s critical to keep tabs on its exchange rates. This article provides CAD/US dollar forecasts for short, mid, and long terms. Plus, you will find out which factors shape the cost of CAD.

Table of Contents

Peculiarities of the CAD/USD Currency Pair

USD/CAD Tech Analysis for Q1 2024

USD/CAD Price History and Performance in 2023

Factors Shaping the CAD Price

Cad To Usd Forecast Summary

Cad to USD Technical Analysis

Long-term USD/CAD price forecast for 2024-2027

USD/CAD price forecast for 2025

USD/CAD price forecast for 2026

USD/CAD price prediction for 2027

USD/CAD price forecast for 2028

Conclusion: Is CAD a Good Investment?

FAQ

Peculiarities of the CAD/USD Currency Pair

The US dollar to Canadian dollar ratio is displayed as USD/CAD. This quotation means how many Canadian dollars it takes to buy one US dollar. When the exchange ratio gets higher, it indicates a strengthening of USD relative to CAD. Vice versa, a decline in the rate suggests that CAD has gained value relative to USD.

USD/CAD’s Trading Peculiarities

During the working week (Mon-Fri), the currency pair is traded nonstop, with substantial turnover volumes and peak volatility observed while American traders are active. News released in Canada and the US plays a critical role in shaping the pair's currency rate. The CAD price is prone to moderate volatility, but when the market is unstable, rate swings may reach 2k–3k pips per day.

Due to its wide usage and great liquidity, USD/CAD is among the most popular trading assets, which explains why the spread is minimal. A regular ECN account often has a spread between 10 and 15 pips in a normal market setting.

USD/CAD Tech Analysis for Q1 2024

The H4 price chart of the USD/CAD pair is retracing upward, according to the technical analysis, following a failed test of the MA(200) two days prior.

After the price breaks above the upper border of the Donchian channel around 1.3453, a positive momentum should resume. An order to purchase can be placed pending at any level higher than this. It is possible to set a stop loss below 1.3357. Following Parabolic signals, the stop loss has to be adjusted to the next fractal low indication after the order is placed.

The Statistics Canada report suggests that the national gross domestic product grew by 0.3% in December. This indicates an acceleration of the country's economic boom. The key industries driving this expansion are manufacturing, real estate, and oil and gas supply.

In September-November 2023, Canada saw a 0.2% increase in its GDP, while records show that the GDP contracted by 1.1% in Q3 of 2023 and then expanded at an annualized pace of 1.2% in Q4 2023. A faster-growing Canadian economy has a positive impact on the national currency, pushing the USD/CAD rates down.

USD/CAD Price History and Performance in 2023

In 2023, the pair displayed erratic patterns, opening January at 1.3545. The following months were marked by rates from 1.31 to 1.39. The price moved sideways throughout the year, exhibiting no discernible trend. It simply fluctuated locally within the given range.

The Bank of Canada's rate rise strategy and steady oil prices (which were maintained by OPEC+'s restricted policy and stayed over 70 USD per barrel) both caused the price drop. The Fed’s interest rate raise strategy and USD strengthening relative to other currencies were major drivers for price alterations.

Factors Shaping the CAD Price

There are several events and conditions that can influence CAD’s cost. Let’s quickly observe some of them.

The monetary policies of the Bank of Canada

From Q1 2022 to Q3 2023, the Canadian central bank battled rising inflation by enforcing tighter monetary policy. Over this time, the price rose nine times; the most recent rise was noticed during July 2023. Inflation has been at the level of 5% ever since. This policy helped to preserve the value of the Canadian dollar. So far, all measures taken by the Bank of Canada are aimed at meeting the 2% inflation objective.

On January 24, the organization announced it will preserve the interest rate at the level of 5%. Since there are no signs of upcoming rate cuts, the CAD value is likely to stay the same throughout the first quarter of 2024.

The monetary policies of the US Federal Reserve

To reduce inflation, the Fed increased interest rates from 0.25% to the stunning level of 5.5% during 2022-2023. This measure has already given positive outcomes, with the inflation rate lowering to 3.4% by February 2024. Experts claim that during March and May 2024, the Fed may lower its interest rate.

Oil costs

Being a significant natural resources provider (especially oil), Canada regards the USA as its biggest consumer. Since oil prices influence USD/CAD to a large degree, CAD is regarded as a commodity currency.

In 2023, Brent quotations ranged from $70 to $96. The cost of oil was supported by OPEC’s production-reduction strategy. The USD to CAD exchange rate may receive significant support if commodity prices climb, and a hold over $80 might lead to a drop in the pair’s quotations. A decline in oil prices under $70 might be detrimental to the Canadian dollar, because it will strengthen the rate.

US and Canadian economic development indicators

The CAD/USD exchange rate also depends on a number of economic conditions and reports, including unemployment statistics, growth tempo, payrolls from non-farms, consumers’ confidence, ISM, trade balance for retailers, and so on.

Cad To Usd Forecast Summary

Key factors, including interest rates, oil prices, and economic performance in both the U.S. and Canada influence the CAD to USD forecast. Over recent months, the USD to CAD exchange rate has shown notable fluctuations due to volatility in the global economy, inflationary pressures, and Federal Reserve monetary policies.

Analysts have observed that while the Canadian dollar forecast has been resilient, external factors such as the labor market and financial markets conditions in both countries will continue to shape the trajectory.

For investors, the current USD to CAD outlook suggests a mix of optimism and caution. Rising interest rates in Canada and expected shifts in the Federal Reserve’s stance on monetary tightening are pivotal indicators. Meanwhile, global oil prices—an important driver of the CAD exchange rate—have been relatively stable, supporting the Canadian dollar.

Analysts anticipate that the Canadian dollar forecast will remain within a controlled range as traders evaluate upcoming economic data and the impact of geopolitical events. The table below summarizes projections for the CAD to USD exchange rate at the end of 2024, and 2025, and a 5-year outlook.

Indicators such as inflation, the balance of trade, and employment data will continue to be key drivers. The exchange rate is expected to experience moderate volatility, particularly as financial markets respond to shifts in global currencies. Traders and investors should monitor oil prices and the actions of the Federal Reserve for guidance on short-term market movements.

Important Notes

• This information is for reference only and is not legal advice or investment advice.
• Projections are based on current USD data and historical trends; actual results may vary due to unexpected fluctuations in the global economy.

For a more detailed analysis or personalized investment strategies, consult with a financial advisor familiar with Canadian dollars and the inverse rate of USD to CAD.

Cad to USD Technical Analysis

The CAD to USD currency pair has displayed dynamic movements, driven by a combination of market sentiment, economic data, and global events.

Technical indicators such as moving averages, RSI, and Fibonacci retracements are instrumental in identifying trends and potential entry and exit points for traders. Recent analysis shows moderate volatility, with exchange rates fluctuating within predictable today's range.

Key Observations:

• Moving Averages: The average for short-term and long-term moving averages suggests mixed momentum, with the 50-day MA acting as a strong resistance point.
• Support and Resistance Levels: Critical support is observed near the lowest level of 1.3400 USD/CAD, while resistance is near 1.3800 USD/CAD, as represented by Fibonacci retracement levels.
• RSI and MACD: Relative Strength Index (RSI) indicates near overbought conditions, aligning with MACD signals for a possible short-term correction.

Analysis Highlights:

• Fed and Bank of Canada Policies: Interest rate decisions by the Fed and the Bank of Canada heavily influence the pair’s direction.
• Volatility and Expectations: Market participants anticipate heightened volatility this week, especially with upcoming economic reports.
• Forecasts for Next Year: The USD forecast indicates potential weakness if the U.S. economy underperforms, supporting more CAD strength.

Screenshot of CAD to USD Technical Chart

Below is a visual representation of the technical analysis for the CAD to USD forecast & currency pair, highlighting the trends, levels, and indicators discussed.

Long-term USD/CAD price forecast for 2024-2027

The CAD to USD forecast for 2024-2025 is pretty neutral – no experts are rushing to predict significant changes in exchange rates:

• J.P. Morgan analysts’ research – Analysts expect the USD/CAD exchange rate to be 1.3300 by December 2024.
• Citibank – Specialists suggest that the USD/CAD quotes will rise to 1.4000 by the end of 2024.
• ING Group – Economists believe that the Canadian dollar will strengthen, leading to the currency pair declining to 1.2800 by the end of 2024 and 1.2700 by the end of 2025.
• EFA – Forecasts the exchange rate to be 1.3140 by the end of 2024 and 1.3830 by the end of 2025.

In 2026, USD/CAD is expected to reach the highest rates after overcoming the 1.4 threshold. However, this rise will be temporary. Most likely, the exchange rate will get back to 1.3 - 1.2 during 2027 and 2028. Generally, no epic spikes are foreseen.

USD/CAD price forecast for 2025

As of November 26, 2024, various analysts have provided the following USD/CAD exchange rate forecasts: Longforecast: Predicts the rate will fluctuate between 1.2860 and 1.3950 throughout 2025. CoinCodex offers a less optimistic outlook, forecasting a range from 1.2979 to 1.3492 for 2024. WalletInvestor estimates the pair will start 2025 at an average rate of 1.375 and approach 1.40 by year-end.

Longforecast US Dollar to Canadian Dollar forecast:

USD/CAD price forecast for 2026

In 2026, the US dollar is expected to continue gaining traction. The rate may overcome the 1.4 threshold and keep growing to a maximum of 1.46. CoinCodex's technical analysis concedes the possibility of reaching a stellar 1.66 by December 2026.

Coincodex USD to Canadian dollar forecast for 2026

USD/CAD price prediction for 2027

Longforecast views 2027 as the year of the Canadian dollar’s rise. The exchange rate may nosedive from 1.408 to 1.267. On the contrary, the CoinCodex site predicts that the price will spike and may even reach the maximum of 1.74.

2027

USD/CAD price forecast for 2028

Projected exchange rates for 2028 range from roughly 1.400 to 1.811, indicating a possible increase in the value of the USD relative to the CAD. Interest rate differences, the state of the economy, and the price of commodities, especially oil, all have an impact on these estimates. Since currency markets are inherently volatile, it's best to keep an eye on central bank policies and economic data for the most up-to-date information.

WalletInvestor US Dollar to Canadian Dollar forecast:

CoinCodex US Dollar to Canadian Dollar forecast:

Longforecast.com US Dollar to Canadian Dollar forecast:

Conclusion: Is CAD a Good Investment?

The Canadian dollar (CAD) can be a good investment, particularly for those seeking exposure to commodity-driven economies, as its value is closely tied to oil and natural resource prices. CAD offers diversification benefits in forex portfolios due to its sensitivity to global economic conditions and monetary policies.

However, its performance can be volatile, influenced by geopolitical events, trade policies, and oil market fluctuations. Investors should consider market trends, a CAD forecast, and risk tolerance when including CAD in their investment strategy.

FAQ

Why is the USD/CAD forecast important?

CAD to USD forecast is important because it helps businesses, investors, and traders manage risks, plan budgets, and make informed decisions in cross-border trade, investments, and currency trading, given the pair's sensitivity to oil prices and economic ties between the U.S. and Canada.

What methods are used in USD/CAD forecast?

Methods to carry out CAD to USD forecast include technical analysis, fundamental analysis, sentiment analysis, and econometric modeling.

How accurate is the USD to CAD forecast?

A USD to CAD forecast varies in accuracy, as they depend on the quality of data, the method used, and external factors like economic shifts and geopolitical events. Forecasts are generally reliable in the short term but less so for long-term predictions due to market volatility.

What are the risks in the USD/CAD forecast?

Risks in USD/CAD forecast include unexpected economic data releases, geopolitical events, oil price volatility, interest rate changes, and market sentiment shifts, all of which can cause sudden and unpredictable currency movements.

What potential future events could trigger changes in the USD/CAD exchange rate?

Potential events include changes in oil prices, U.S. or Canadian interest rate adjustments, economic data releases, geopolitical tensions, trade policy shifts, and natural disasters affecting key industries.

Will the USD/CAD exchange rate continue to remain volatile?

The USD/CAD exchange rate is expected to remain volatile due to fluctuating oil prices, differing monetary policies between the U.S. and Canada, and global economic uncertainties. Analysts anticipate that the Canadian dollar may weaken soon but could rally in 2025 if the global economy improves.

How does the difference in interest rates affect the USD/CAD rate?

Differences in interest rates between the U.S. and Canada affect the USD/CAD rate by influencing capital flows; higher rates in one country attract investors, strengthening its currency relative to the other.