Video: Case for Canadian dollar comeback in second half of 2026
USD/CAD has risen from 1.37 to 1.42 this year, but analysts see a potential round trip as USMCA negotiations progress and the Bank of Canada survey shows solid business sentiment.
Analysts are making a case for a Canadian dollar comeback in the second half of 2026, despite the currency's recent weakness. USD/CAD started the year at 1.37 and has since risen to 1.42, reflecting persistent pressure on the loonie. However, some market participants expect a round trip, with the pair potentially returning to its starting level as trade uncertainties ease.
The key driver for a potential CAD rally is the ongoing USMCA renegotiation. While the talks are top of mind, the US demands are seen as manageable, and there are signs of confidence on the Canadian side. Analysts expect token concessions after some brinksmanship, followed by clarity and a relief rally. Risks are tilted to the CAD upside, especially if tariffs on steel, aluminum, and lumber are lowered. This trade-sensitive dynamic is crucial for forex traders, as USD/CAD is highly responsive to trade policy shifts. Live FX prices and charts on NowPrice show how the market is reacting to each headline.
The Bank of Canada's Q2 Business Outlook Survey, released Monday, showed solid business sentiment despite trade headwinds. Investment intentions remain positive, suggesting the economy can withstand the uncertainty. Going forward, traders should watch for further USMCA developments and BoC policy signals. A successful deal could trigger a sharp CAD appreciation, while prolonged talks may keep the loonie under pressure. Key levels to monitor include 1.40 support and 1.45 resistance.