**USD/CAD Forecast – 12 August 2025**
*Original content by: Christopher Lewis, DailyForex.com. This version has been expanded and rewritten for educational and analytical purposes.*
The USD/CAD currency pair has shown signs of slow upward momentum heading into mid-August 2025. While several macroeconomic factors are influencing the pair’s trajectory, traders remain cautious given the overall market tenor and diverging monetary policies between the United States and Canada.
This article offers an in-depth technical and fundamental analysis of the USD/CAD as of August 12, 2025, including potential scenarios, key support and resistance levels, and broader economic impacts affecting the pair.
## Overview: What’s Driving USD/CAD?
The USD/CAD pair is heavily influenced by a combination of:
– Interest rate differentials between the Federal Reserve and the Bank of Canada (BoC)
– Crude oil performance (given Canada is a major oil exporter)
– General sentiment around the U.S. dollar due to global geopolitical and economic developments
– Economic data such as employment reports, GDP releases, and inflation figures from both countries
As of August 2025, several of these factors are pulling the pair in opposite directions, creating a noticeable consolidation zone and limited breakout attempts.
## Technical Analysis for USD/CAD
### Price Behavior and Trends
– The USD/CAD pair is slowly climbing but remains within a relatively tight trading range.
– Currently hovering around the 1.3700 level, the market has not shown strong willingness to break out significantly in either direction.
– The pair remains above key short-term moving averages, suggesting some upward bias but without momentum.
### Resistance Levels
Key resistance levels to monitor include:
– 1.3750: A recently tested level where price action has repeatedly faced selling pressure
– 1.3800: A psychological round number that could act as a hurdle to further gains
– 1.3850: A broader resistance level that coincides with previous support turned resistance zones from earlier in 2025
A confirmed break and daily close above 1.3850 could open up the path toward the 1.4000 level, a significant long-term resistance level not seen since early 2023.
### Support Levels
Possible support zones include:
– 1.3650: A near-term support level providing a floor for recent price action
– 1.3600: Another psychological barrier; breaking below here could shift sentiment in favor of sellers
– 1.3550: A deeper support zone where buying interest has previously emerged
If the pair falls through these levels, it may test the long-term ascending trendline dating back to the low of 1.3100 observed in late 2024.
### Chart Patterns and Signals
– A possible symmetrical triangle is forming, reflecting market indecision. This pattern typically precedes breakout moves.
– Momentum indicators such as RSI and MACD show neutral-to-bullish signs. RSI hovers slightly above 50, while MACD histogram bars show waning bearish momentum.
– Volume has been relatively light, leaving the pair vulnerable to unexpected spikes or drops based on external events.
## Fundamental Drivers Affecting USD/CAD
### Federal Reserve Policy Outlook
– The Federal Reserve has adopted a cautious tone after a series of rate hikes through 2023 and early 2024. Some speculation about a rate cut toward the end of 2025 exists.
– Inflation in the U.S. has continued to decline but remains above the 2 percent target. This keeps the door open for a prolonged pause in rate changes.
– Recent U.S. jobs data has shown resilience, although wage growth is slowing, suggesting the Fed may avoid hiking rates further.
### Bank of Canada Policy Stance
– The BoC recently paused after modest rate increases throughout 2024. The bank is now emphasizing the need to assess the impact of prior hikes.
– Inflation in Canada has also moderated, currently
Read more on USD/CAD trading.