Analysts at Bank of America expect USD/CAD to rise towards 1.44 in September as further Fed rate hikes support the Dollar, before the pair retreats through 2027.
The US Dollar to Canadian Dollar exchange rate slipped lower on Wednesday, but currency analysts at Bank of America still see room for USD/CAD to climb towards 1.44 over the next couple of months.
The pair traded around 1.4018, down 0.34% on the day. USD/CAD also fell 1.36% in July, reversing part of June’s 2.97% rise, and has spent the past month moving between roughly 1.3990 and 1.4240.
BofA’s forecast is built around a renewed period of Federal Reserve tightening.
“We remain comfortable with our forecast of 25bp hikes at each of the remaining three Fed meetings this year,” the bank said, pointing to September, October and December.
That view is considerably more hawkish than the market’s interpretation of Chair Kevin Warsh’s latest press conference.
“Warsh was dovish. We remain hawkish,” BofA said.
The bank argues that the Fed may need to tighten partly to restore credibility after long-dated Treasury yields and inflation expectations rose following the July meeting.
“Ironically, we think the need to re-establish credibility increases the likelihood that the Fed will hike in September,” it said.
USD/CAD has retreated from July’s highs above 1.42, although the pair continues to hold close to the 1.40 area.
BofA forecasts USD/CAD at 1.44 in September, before a modest decline to 1.43 in December.
The bank then expects the reversal to gather pace in 2027, with the pair falling to 1.42 in March, 1.40 in June and 1.38 by September and December.
The near-term rise therefore looks more like a final period of Dollar strength than the start of a lasting move higher.
BofA’s US outlook provides the main support for the forecast.
The bank expects July payrolls to rise by 80,000, a below-consensus figure but still firm enough to confirm that “downside risks to the labor market have largely faded”.
It also sees core inflation remaining stubbornly above target.
“The labor market appears to have stabilized,” BofA said. “Combined with persistently sticky inflation, we think that strengthens the case for reversing those cuts.”
A stronger US rate profile would normally favour the Dollar against the Canadian Dollar, especially if the Bank of Canada remains less willing to tighten.
USD/CAD has alternated between sharp monthly gains and losses, with July recording a 1.36% decline after June’s 2.97% rise.
The Canadian Dollar has nevertheless performed well over the past month, gaining against the US Dollar, Pound and Euro. That resilience helps explain why BofA’s projected rise is relatively contained rather than a break far beyond recent highs.
The Canadian Dollar has strengthened against most major currencies over the past 30 days, including a 1.37% gain against the US Dollar.
For now, BofA’s message is two-stage: higher US rates could lift USD/CAD towards 1.44 in the near term, but the Dollar advantage should fade next year, opening the way for a return towards 1.38.
Canadian Dollar Prices: This Week
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -1.38% | -1.33% | -3.78% | -0.61% | -1.11% | -1.69% | -1.43% | |
| EUR | +1.40% | +0.06% | -2.43% | +0.79% | +0.27% | -0.31% | -0.05% | |
| GBP | +1.34% | -0.06% | -2.49% | +0.73% | +0.22% | -0.37% | -0.11% | |
| JPY | +3.93% | +2.49% | +2.55% | +3.30% | +2.77% | +2.17% | +2.44% | |
| CAD | +0.61% | -0.78% | -0.72% | -3.19% | -0.51% | -1.09% | -0.83% | |
| AUD | +1.13% | -0.27% | -0.21% | -2.70% | +0.51% | -0.58% | -0.32% | |
| NZD | +1.72% | +0.31% | +0.37% | -2.13% | +1.10% | +0.59% | +0.26% | |
| CHF | +1.45% | +0.05% | +0.11% | -2.38% | +0.84% | +0.32% | -0.26% |
The FX heat map compares how Canadian Dollar (CAD) has performed against a basket of major currencies over the past week. The largest move was against the Japanese Yen, where Canadian Dollar recorded its sharpest decline. Data comparing prices today (05/08/2026 16:37 UTC) and daily close on 29/07/2026.
To read the table, choose the base currency from the left-hand column and then move across to the quote currency along the top row. For example, the GBP row and USD column shows the weekly percentage move in GBP/USD.
