- The USD/CAD forecast remains strongly bearish under 1.3800 as the geopolitical risks ease.
- Upbeat US GDP data failed to sustain buying pressure for the US dollar.
- Stable oil prices and receding oversupply concerns continue to support the loonie.
USD/CAD has stabilized around 1.3790 after snapping a four-day losing streak, as the US dollar finds a footing following Thursday’s drop. The greenback’s rebound is less about fresh US data and more about a slight easing in geopolitical risk after President Trump walked back tariff threats tied to the Greenland dispute and signaled a framework understanding with NATO, even if the details remain gloomy and keep risk premium elevated.
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Macro fundamentals remain mixed. US core PCE inflation rose to 2.8% YoY in November (from 2.7%), in line with expectations, reinforcing the Fed’s case to hold rates next week. At the same time, markets still lean toward easing later in the year, with pricing heavily skewed toward a December cut. Growth has not rolled over either; US GDP printed 4.4% annualized in Q3 2025, and jobless claims were a low 200k, which should help put a floor under USD dips when risk sentiment turns.
However, the Canadian dollar is taking its usual support from crude. WTI is attempting to recover near 59.60 per barrel after a sharp prior-session decline. Moreover, comments from Saudi Aramco’s CEO, downplaying oversupply risks and emphasizing record global consumption and further demand growth into 2026, add to the oil bid. This affects USD/CAD because rising oil prices improve Canada’s trade terms and CAD sentiment, especially when US political instability lowers the dollar’s interest rate.
Later today, the preliminary US S&P Global PMI could influence the market. If it comes in stronger, the USD may rebound. Contrarily, if weaker, selling pressure may resume. Meanwhile, Canada’s interest rate forecast remains unchanged. Thus, markets expect the Bank of Canada to maintain its 2.25% rate.
USD/CAD Price Technical Forecast: Bearish Below 200-MA
The USD/CAD 4-hour chart shows a strong bearish trend, as the price has broken below the 200-period MA at 1.3800. Two bearish crossovers (20 and 50 MAs, and 20 and 100 MAs) continue to mount selling pressure.
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However, the RSI remains flat near the oversold region, pointing at short-term consolidation ahead of further downside. The downside could find a strong support at 1.3700 ahead of December swing lows at 1.3640. On the upside, 1.3800 and 1.3860 are key resistance levels that could cap the pair’s upside.
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