We are pleased to bring you the latest edition of the series produced by our colleagues in RBC Capital Markets, hosted by George Davis, CMT, the award winning Chief Technical Analyst for Fixed Income and Currency Strategy. In this installment, George provides an overview of his USDCAD forecast for 2026, presenting a declining profile for the pair.
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USDCAD is expected to fall to 1.3600 in Q1, 1.3500 by mid-year to reach 1.3300 by the end of 2026. This will be driven by two expected rate cuts by the FOMC, while the Bank of Canada is expected to remain on hold, providing a bearish backdrop for the USD. George foresees some headline risk as the USMCA deal is renegotiated in July, but this should be muted if the broader structure remains in place. Heading into year-end, there are some downside risks in play for USDCAD with the recent break below 1.3950 ending an uptrend in place since July. The change in sentiment suggests 1.3725 is a key support level to watch followed by the 1.3425-1.3550 region.
On the topside, 1.4150 is significant given the two failed attempts to break above this in November. For the month ahead, George sees 1.3600 as the downside limit with 1.4100 on the topside.