USDCAD: Bank of Canada’s dovish stance supports the US dollar
The USDCAD pair remains locked within a Triangle pattern, driven by diverging monetary policies of the Fed and the Bank of Canada. The exchange rate currently stands at 1.3797. Find out more in our analysis for 22 September 2025.
USDCAD forecast: key trading points
- Canada’s Q2 GDP contracted by 1.6%, with exports slumping nearly 27%
- Canada’s labour market worsened: net job losses recorded, unemployment hit 7.1% in August
- Slower wage growth reinforces the need for further BoC easing
- USDCAD forecast for 22 September 2025: 1.3865
Fundamental analysis
The USDCAD rate is strengthening, with the pair remaining in a sideways range for the third consecutive session. The US dollar found support from expectations of fresh signals from Federal Reserve officials and the upcoming release of key US inflation data this week.
Last week, the Fed lowered rates by 25 basis points, in line with forecasts, marking its first policy easing since December. The regulator also signalled the possibility of two more cuts this year. Investors now await Federal Reserve Chairman Jerome Powell’s remarks later this week for clues on future policy direction.
The Bank of Canada, meanwhile, cut its policy rate by 25 basis points to 2.5% amid a sharper-than-expected economic slowdown. Q2 GDP fell 1.6%, while exports plunged nearly 27%. Labour market conditions also deteriorated, with net job losses recorded and the unemployment rate rising to 7.1% in August. These factors confirmed the need for further monetary easing.
USDCAD technical analysis
The USDCAD rate is trading within a developing Triangle pattern. The pair recently bounced from the upper boundary of the descending channel and is attempting to hold above the Moving Averages, indicating sustained buying pressure.
Today’s USDCAD forecast suggests a bullish scenario with a high probability of a move towards the 1.3865 resistance level. The Stochastic Oscillator has turned upwards from oversold territory, confirming renewed bullish momentum and creating conditions for further upside.
Consolidation above 1.3845 would confirm the bullish scenario.
Summary
The combination of the Bank of Canada’s dovish policy and expectations of guidance from the Fed creates conditions for further US dollar strength. Technical analysis of USDCAD points to a bullish setup, with the pair likely heading towards the 1.3865 resistance level.