USD/CAD Forecast: Dollar Holds Near 1.4262 Despite Strong Canadian Trade Data

In August, Canada's merchandise trade surplus increased from C$0.787 billion to C$4.200 billion, marking the sixth consecutive month of positive trade balances. The average value of the Canadian dollar increased by 1.1 US cents, the strongest monthly appreciation since December 2025. As a result, exports expressed in US dollars increased by 4.0%, while in Canadian dollars the indicator rose by 2.5%, reversing the previous month's 2.6% decline. Positive dynamics were recorded in eight of the eleven product categories, with energy exports increasing by 4.7% and consumer goods exports rising by 6.6%. Total imports decreased by 0.6% in US dollar terms and by 2.0% in Canadian dollars, marking the first decline since January. The largest reduction was recorded in imports of motor vehicles and parts (–8.8%), while growth was observed in six of the eleven product categories.

The US dollar has nearly returned to its recent highs and is trading near 102.40 on the USDX. Investor confidence in the currency remains relatively stable following the publication of the minutes from the Federal Reserve's September meeting, which broadly confirmed market expectations regarding the regulator's monetary policy outlook. According to the document, the Federal Open Market Committee (FOMC) unanimously approved an interest rate increase, while most policymakers believe another adjustment in borrowing costs may be appropriate before the end of the year. As a result, the probability of further monetary tightening by at least 25 basis points at the October meeting currently stands at only 18.3%, according to the CME FedWatch Tool, while the probability of keeping rates unchanged is approximately 81.7%.

As discussed in our previous USD/CAD forecast, the US dollar continues to receive support from expectations of further Federal Reserve monetary tightening, although positive Canadian economic data may temporarily limit the pair's upside potential.

Under these conditions, a continuation of the USD/CAD upward trend remains the most likely scenario, provided the pair holds above its nearest support levels.

Support and resistance levels

On the daily chart, the trading instrument is moving within an upward trend between the first-order (I) levels, approaching the left first-order resistance near 1.4334. The main scenario suggests further growth toward the intersection of the right third-order resistance (III) and the left first-order resistance (I) at 1.4334, followed by the intersection of the left third-order resistance (III) and the right first-order resistance (I) at 1.4506.

In the event of a downward reversal, further movement may develop within a weak descending trend toward the intersection of the right and left third-order support levels (III) at 1.4214 and the intersection of the right and left second-order support levels (II) at 1.4048.

Support levels: 1.4214, 1.4048.

Resistance levels: 1.4334, 1.4506.

USD/CAD trading scenarios and exchange rate forecast

Long positions may be opened after the price consolidates above 1.4334, with a target at 1.4506. Stop-loss — 1.4250. Estimated implementation period: 7 days or more.

Short positions may be opened after the price consolidates below 1.4214, with a target at 1.4048. Stop-loss — around 1.4300.