Title: USD/CAD Closes Above 12-Week Low Despite Weekly Decline: A Detailed Overview
Original Source: TradingPedia, written by Miroslav Marinoff
Supplementary Sources: MarketWatch, ForexLive, DailyFX, Investing.com
The USD/CAD (U.S. Dollar to Canadian Dollar) currency pair concluded the trading week on a slightly stronger note by hovering above a 12-week low, even as it experienced a broader weekly loss. This movement was shaped by geopolitical developments, central bank policy expectations, and crucial economic data from both the United States and Canada. Despite strong intraday volatility, currency traders saw the pair’s price stabilize slightly above the 1.3400 support level on Friday. That level served as a psychological threshold and technical support, significantly influencing market behavior.
Here is an in-depth look at the developments influencing the currency pair, the technical and macroeconomic backdrop, and what could lie ahead for USD/CAD.
Geopolitical and Macroeconomic Influences
Throughout the week of December 9-13, 2025, the USD/CAD pair was influenced by a combination of global economic indicators, market sentiment, and central bank policies.
Key macroeconomic and geopolitical drivers included:
• Federal Reserve Monetary Policy: The U.S. Federal Reserve maintained interest rates steady during its December meeting, signaling that the tightening cycle may be over. Chairman Jerome Powell indicated that future rate hikes are unlikely unless inflation reaccelerates, sparking speculation of potential rate cuts in 2026. As a result, the U.S. dollar index (DXY) declined against a basket of major currencies, contributing to USD/CAD’s downside.
• Bank of Canada’s Neutral Outlook: The Bank of Canada (BoC) had earlier signaled a pause in rate hikes, citing signs of economic cooling in Canada’s labor market and domestic demand. With both central banks now aligning more toward cautious stances, the relative monetary policy divergence that typically benefits one currency over another diminished.
• Lower U.S. Treasury Yields: Yields on U.S. 10-year and 2-year Treasury bonds fell during the week, following subdued inflation data and dovish Fed commentary. With real yields declining, the U.S. dollar weakened, exerting downward pressure on USD/CAD.
• Canadian Employment Data: Statistics Canada released its monthly Labor Force Survey showing a modest increase in employment but a rise in the unemployment rate to 5.9%, the highest since January 2022. This contributed to mixed movement in the Canadian dollar, limiting its strength.
• Crude Oil Volatility: Canada is a major oil exporter, and fluctuations in oil prices directly affect the Canadian dollar. While oil prices saw some upside earlier in the week due to geopolitical tensions in the Middle East and shipping disruptions in the Red Sea, those gains were capped by global demand concerns. West Texas Intermediate (WTI) crude hovered around $71–$73 per barrel by the week’s end, providing limited support for the loonie.
USD/CAD Weekly Performance Summary
The USD/CAD pair declined approximately 0.7% over the week, its second consecutive weekly drop. However, Friday’s late-session rebound helped the currency pair avoid closing at its lowest levels since mid-September.
• Opening Price (Dec 9, 2025): Near 1.3540
• Weekly Low (Dec 13, 2025): Approximately 1.3370
• Closing Price (Dec 13, 2025): Slightly above 1.3400
• Weekly Decline: Roughly 70 pips or 0.7%
On Tuesday and Wednesday, the pair experienced increased volatility as traders reacted to the U.S. Consumer Price Index (CPI) and Producer Price Index (PPI) data. Both metrics came in below expectations, reinforcing the notion that inflationary pressures in the U.S. are cooling. This added to the growing sentiment that the Fed
Read more on USD/CAD trading.