The USD/CAD weekly forecast remains in a gradual downtrend amid a weaker greenback.
BoC and Fed divergence could remain favorable for the USD/CAD sellers.
Job reports from both sides, due next week, will be key to watch.
The USD/CAD closed last week under pressure, extending a gradual downward trend that began in late 2025. Both currencies struggled to gain momentum, as the continued weakness of the US dollar persisted in the FX markets. Meanwhile, the Canadian dollar was supported by stable domestic data. Instead of a sharp sell-off, the downside move was limited, as sellers still dominated but without any impetus.
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The primary driver has been the changing outlook for US monetary policy. The US dollar also finished 2025 on the steepest annual decline in eight years, and this weakness carried into the first full trading week of 2026. Softer US labor data, coupled with rising expectations that the Federal Reserve will deliver at least two rate cuts this year, have weighed heavily on the greenback. Political uncertainty regarding the future leadership of the Fed has contributed to investor caution, keeping dollar rallies short-lived.
The Bank of Canada has held a more moderate position on the Canadian side. Although rate cuts have been left on the table for a later time in 2026, officials have been cautious not to promise too much, especially when inflation rates are proving stubborn in some quarters.
This comparative political stability has helped curb the negativity in the Canadian dollar, despite lingering global growth concerns. Oil prices have not skyrocketed but have remained steady enough to support the CAD.
The previous week’s price action recorded USD/CAD as probing on the lower support but failing to break decisively. The buyers are still seen on dips, indicating that the market remains wary of pursuing downside without further evidence that the US data will worsen. That indecision has kept the two in a slow grind instead of a precipitous fall.
The following week could be pivotal to set the direction. Should US data support the story of decelerated growth and waning inflation tracts, USD/CAD could finally breach the support and open the door to a further downward move. On the other hand, any positive surprise in the US, especially regarding inflation, could induce a corrective rebound, as positioning is showing a more substantial imbalance against the dollar.
Canadian data will also be critical. Strong domestic releases may inspire CAD bulls, while economic weakness would rekindle downward risk on the currency and stabilize the USD/CAD exchange rate.
USD/CAD Major Events Next Week
US ISM Manufacturing PMI (Monday)
US ISM Services PMI (Tuesday)
ADP Employment and JOLTS Job Openings (Wednesday)
Canada Employment Report (Friday)
US NFP and Consumer Sentiment (Friday)
USD/CAD Weekly Technical Forecast: Corrective Upside Under 20-DMA
USD/CAD daily chart
The USD/CAD daily chart shows a corrective upside as profit-taking occurred due to the oversold RSI. However, the price remains well below the 20-day MA at 1.3765, while multiple MA crossovers suggest room for more downside.
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The upside could be capped by the 200-day MA near 1.3860, while the downside target could be seen at the demand zone near 1.3550. The indicators suggest the path of least resistance lies on the downside.
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