USD/CAD Forecast: Surges Before Fed and BoC Rate Decisions – 30 July 2025

-- The US dollar has rallied against the Canadian dollar during the trading session on Tuesday, as we head into what could be the biggest day for this pair all year on Wednesday.
-- This is because both the Bank of Canada and the Federal Reserve have interest rate decisions during the session.
-- Ultimately, I think the real focus will be on the Americans as per usual, but I also recognize that we have a scenario where it’s obvious that the Federal Reserve is the focus of most traders, so despite the fact the Canadians will have something to say, the reality is that the US dollar tends to move in the same direction against most currencies.

Trade Deal

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If you would’ve asked me 6 months ago who the first country to come to terms with the United States with a trade deal, it’s a good chance that I would’ve replied with Canada. However, we now have seen Japan, the United Kingdom, the European Union, several Asian countries, and even possibly the Chinese sometime in the near future, all come to terms with the Donald Trump administration. However, the Canadians have chosen not to negotiate with the Americans, and Canada will probably pay the price. Unless something changes very quickly with the tariff situation, I anticipate that the Canadian dollar could get absolutely pummeled.

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From a technical analysis standpoint, if we can close above the 1.38 level, then it’s likely that the market could go much higher, perhaps as high as the 1.40 level initially, and anything above that level could kick off a longer-term “buy-and-hold situation.” On the other hand, if we were to break down below the 1.35 level, then I think the Canadian dollar would probably strengthen quite nicely against the US dollar, but for what it is worth, the US bond market was absolutely on fire during the trading session on Tuesday, as traders piled into US Treasuries. In other words, there was a ton of US dollar demand. I suspect that probably could continue.

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