USD/CAD Forecast:USD Continues to Rise Against the Loonie on Wednesday – 05 February 2026

Traders continue to look at the upside in this pair but face a resistance barrier.

USD/CAD

The US dollar rallied a bit against the Canadian dollar during trading on Wednesday as we continue to see a lot of choppy behavior. At this point in time, I think you have a situation where traders are going to continue to look at this through the potential of the 1.35 level being the longer-term floor.

If we were to break down below the level, it would obviously be very ugly and could send the US dollar down to the 1.33 level. Ultimately, if we do break out to the upside, it is possible that we could go looking at the 200-day EMA above.

The Influence of Crude Oil and Central Banks

I think that is a situation where you would probably see the US dollar strengthening against almost everything else; it would not just be a Canadian dollar related thing. Keep in mind that crude oil can move this pair, although it does not move it the way it used to in the sense that the United States produces 13.5 million barrels of oil a day, but it does have somewhat of an influence.

As far as central banks are concerned, the market keeps trying to push the Federal Reserve into cutting aggressively and they just do not want to do that. That being said, the Federal Reserve is expected to cut 2 times sometime this year and that does weigh upon the dollar to a point.

At the same time, the Bank of Canada is expected to be relatively flat. If that is going to be the case, the longer the Federal Reserve takes to get dovish, the worse that is going to be for the Canadian dollar.

Beyond that, manufacturing PMI numbers in the United States recently came out hotter than anticipated, the highest level in 4 years. So, there are a lot of reasons to think that the Federal Reserve is going to be cautious about cutting rapidly and that could put a little bit of a bid into the dollar. But really, by the time it is all said and done, this is a pair that tends to be relatively flat.

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