UPDATE: The Canadian Dollar (CAD) flatlined on December 26, 2025, remaining stagnant against the US Dollar (USD) as market activity dwindles during the holiday season. With most traders sidelined, the currency shows little movement, trapped within a narrow range.
Market momentum is notably absent, as participants navigate the final trading days of the year. The CAD’s position against the USD is currently at 1.3697, reflecting the subdued market conditions that typically accompany the year-end slowdown.
Recent meeting minutes from the Federal Open Market Committee revealed no significant new insights, indicating that policymakers are leaning towards a dovish stance. They are considering further interest rate cuts only if inflation metrics show continued easing. This backdrop creates uncertainty for the CAD as it heads into 2026.
Traders are closely monitoring the Bank of Canada, which remains constrained by low interest rates while the Federal Reserve signals potential rate cuts. As a result, the CAD’s future performance may hinge on the widening interest rate differential between Canada and the United States.
The CAD has struggled to gain traction, remaining stuck near familiar levels against the USD. Analysts suggest that the deeply overbought state of the Loonie could lead to a short-term decline, but also hint at the possibility of gains as the rate landscape evolves in 2026.
As the market digests these developments, the Canadian Dollar’s price forecast indicates bearish momentum. The USD/CAD pair trades below both the 50-day and 200-day exponential moving averages, with the former crossing beneath the latter, reinforcing a bearish outlook.
Technical indicators show the Relative Strength Index (RSI) near 32, signaling weak momentum following an oversold dip, while the Stochastic oscillator hints at fading downside pressure. A daily close above the 50-day EMA could ease selling pressure, opening the door for a corrective bounce towards the 200-day EMA. However, failure to surpass this average would likely push the CAD to new lows.
Traders and economists alike are eager to see how key factors such as interest rates, oil prices, and U.S. economic health will influence the CAD in the coming weeks. A robust economy typically boosts the CAD, while weak economic data could lead to further depreciation.
What’s Next: As the year concludes, all eyes will be on upcoming economic data releases and central bank announcements that could impact the CAD. Traders should remain vigilant for any shifts in market sentiment that could ignite movement in the currency pair.
This situation is developing, and more updates will follow as new information becomes available. Stay tuned for the latest insights and analysis on the Canadian Dollar and its performance against the U.S. Dollar.
