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.
Peculiarities of the CAD/USD Currency Pair
USD/CAD Tech Analysis for Q1 2024
USD/CAD Price History and Performance in 2023
Long-term USD/CAD price forecast for 2024-2027
USD/CAD price forecast for 2024
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?
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.
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.
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.
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.
There are several events and conditions that can influence CAD’s cost. Let’s quickly observe some of them.
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.
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.
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.
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.
The USD/CAD forecast for 2024-2025 is pretty neutral – no experts are rushing to predict significant changes in exchange rates:
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.
According to tech analysis, during 2024, the exchange rate will keep around 1.35 (the CAD/USD rate – 0.74). Based on a survey of 35 foreign exchange specialists, Reuters has forecasted that CAD will increase by 0.4% to 1.3533 per USD, against the positive forecasts of 1.3450 in a similar poll conducted in November 2023.
| Month | Range |
|---|---|
| Feb | 1.318 - 1.374 |
| Mar | 1.321 - 1.376 |
| Apr | 1.350 - 1.392 |
| May | 1.319 - 1.371 |
| Jun | 1.289 - 1.339 |
| Jul | 1.309 - 1.357 |
| Aug | 1.324 - 1.364 |
| Sep | 1.344 - 1.398 |
| Oct | 1.350 - 1.392 |
| Nov | 1.318 - 1.371 |
| Dec | 1.320 - 1.360 |
Longforecast’s prediction is 1.340-1.40, with maximum fluctuations of 4.5%. Coincodex provides a less optimistic outlook – it predicts that the rate may range from 1.26 to 1.38. According to the WalletInvestor website, the pair will start the next year with an average rate of 1.375 and finish it by almost reaching 1.40.
| Month | Range |
|---|---|
| Jan | 1.323 - 1.363 |
| Feb | 1.310 - 1.350 |
| Mar | 1.330 - 1.384 |
| Apr | 1.320 - 1.364 |
| May | 1.332 - 1.372 |
| Jun | 1.312 - 1.352 |
| Jul | 1.292 - 1.332 |
| Aug | 1.312 - 1.371 |
| Sep | 1.351 - 1.407 |
| Oct | 1.357 - 1.399 |
| Nov | 1.373 - 1.415 |
| Dec | 1.359 - 1.401 |
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.
| Month | Range |
|---|---|
| Jan | 1.380 - 1.440 |
| Feb | 1.379 - 1.421 |
| Mar | 1.375 - 1.417 |
| Apr | 1.383 - 1.425 |
| May | 1.366 - 1.408 |
| Jun | 1.387 - 1.450 |
| Jul | 1.374 - 1.429 |
| Aug | 1.380 - 1.422 |
| Sep | 1.398 - 1.440 |
| Oct | 1.405 - 1.447 |
| Nov | 1.426 - 1.488 |
| Dec | 1.418 - 1.466 |
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. WalletInvestor’s technical analysis shows a price average of 1.43, staying within the range of 1.4 - 1.46.
| Month | Range |
|---|---|
| Jan | 1.387 - 1.440 |
| Feb | 1.368 - 1.410 |
| Mar | 1.361 - 1.403 |
| Apr | 1.368 - 1.410 |
| May | 1.340 - 1.389 |
| Jun | 1.307 - 1.360 |
| Jul | 1.308 - 1.348 |
| Aug | 1.328 - 1.376 |
| Sep | 1.298 - 1.356 |
| Oct | 1.282 - 1.322 |
| Nov | 1.263 - 1.302 |
| Dec | 1.248 - 1.286 |
It is impossible to make a precise technical analysis for such a long term, so the following are mere calculations based on the current USD/CAD performance:
| Month | Range |
|---|---|
| Jan | 1.449 - 1.458 |
| Feb | 1.456 - 1.460 |
| Mar | 1.459 - 1.465 |
| Apr | 1.449 - 1.468 |
| May | 1.449 - 1.451 |
| Jun | 1.446 - 1.452 |
| Jul | 1.444 - 1.452 |
| Aug | 1.445 - 1.455 |
| Sep | 1.451 - 1.460 |
| Oct | 1.461 - 1.472 |
| Nov | 1.472 - 1.478 |
| Dec | 1.478 - 1.481 |
The USD/CAD pair's quotations showed a sideways trend in 2023, fluctuating between 1.3100 and 1.3900, a broad price range. In order to lessen the increasing strain of inflation, regulators in the US and Canada aggressively tightened monetary policy, with their interest rates keeping at the 5.5% level.
Expectations of interest rate reduction and oil prices above 80 USD are currently supporting the Canadian currency. In the medium run, the pair might drop to semi-annual lows, or 1.3100–1.3180, if worse scenarios come to pass. Expert predictions from the experts listed above indicate that in 2024–2025, the USD/CAD exchange rate will be between 1.2700 and 1.4000. Hence, CAD is not a prospective long-term investment, but a nice trading instrument.
If you want to trade this pair, you should be aware of its volatility. Knowing the USD/CAD price prediction is also crucial for long-term investments.
This trading pair can be analyzed with the help of widely used indicators (RSI, Moving Averages, MACD, and a bunch of oscillators) – all of the above falls under technical analysis. You should also study its historical performance, and never forget about local and global market trends.
When it comes to forecasting based on technical indicators, you can make more or less precise predictions in the short and mid term. Watching trends is also important as you can forecast bearish or bullish sentiments. However, long-term USD/CAD price predictions are harder to make, because these currencies are strongly influenced by geopolitical and other aspects.
The major risk is the impact of events on the American and Canadian financial markets, such as changes in banks’ interest rates, announcements of major agencies, inflation rates, and so on. Hence, when you make a long-term prediction, there is a chance of a serious correction triggered by the national economies.
These include economic data releases, alterations of interest rates, and various geopolitical events. USD is impacted by FED’s interest rates, GDP, growth rates, unemployment statistics, and the volume of money printed.
Since these are two widely used currencies, it is impossible for the rate to stay stable.
When Canadian interest rates exceed American ones, the CAD usually appreciates towards the USD, and vice versa.
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