The Canadian Dollar (CAD) is having a tough time dropping below the 1.40 level against the US Dollar, which is weakening. Even with a weaker USD, the CAD hasn’t broken this barrier, according to Scotiabank analysts. The Bank of Canada recently stated that there is not much room left for more economic support. The CAD is currently holding around the 1.3990/00 level. If it can drop below this mark, it might favor the CAD’s performance.

US Dollar Weakness and Bank of Canada’s Stance

The charts show five days of losses for the USD, hinting at favorable conditions for the CAD if it drops below 1.3900. The Bank of Canada (BoC) noted that interest rates are near their limits to help the economy, reflecting comments from Governor Macklem. Further market insights show movements in other currency pairs and commodities. For instance, EUR/USD increased past 1.1600, while GBP/USD fell below 1.3200. Gold prices also dropped significantly to $4,150. In related news, the Dow Jones dropped nearly 700 points, and USD/JPY fell as the US Dollar weakened further. Information about top brokers and trends for 2025 was also shared to assist traders. FXStreet advises traders to do thorough research before making decisions, warning about risks involved and clarifying that this information is not personalized investment advice.

Canadian Dollar Forecast

The Canadian dollar is struggling to rise above the 1.40 level against the US dollar. Although the US dollar is generally weak, dropping below this level has proven challenging. This situation sets up a key moment for traders in the upcoming weeks. The Bank of Canada has indicated there isn’t much more it can do to support the economy, supported by recent data. October’s inflation figures showed a core Consumer Price Index (CPI) stuck at 3.2%, while the latest jobs report signaled a slowdown in employment growth. This limits the loonie’s strength. On the US side, the dollar has faced five days of losses. This follows the latest report showing inflation cooling slightly to 3.1%, which has led to increased speculation that the Federal Reserve may cut rates in early 2026. This outlook is currently driving the USD/CAD pair lower. For traders in derivatives, this suggests increased volatility around the current price. Buying straddles or strangles with a strike around 1.40 could be a smart strategy to take advantage of significant moves in either direction. Implied volatility has risen recently, showing market uncertainty. The 1.4000 level has been a significant pivot point, especially during the high-volatility times of 2020. A sustained drop below the 1.3990 support could lead to a test of the 1.3900 area. However, if it doesn’t break lower, prices could rebound toward the mid-1.41s again. The price of oil, which is an essential Canadian export, is not helping either. WTI crude is having trouble staying above $85 a barrel due to concerns about global growth. Without a significant rise in energy prices, it is challenging to build a strong bullish case for the Canadian dollar. Create your live VT Markets account and start trading now.

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