{"id":41204,"date":"2025-07-01T11:34:59","date_gmt":"2025-07-01T11:34:59","guid":{"rendered":"https:\/\/quickassetsmarket.com\/index.php\/2025\/07\/01\/usd-cad-forecast-as-the-us-dollar-index-dxy-crashes\/"},"modified":"2025-07-01T11:34:59","modified_gmt":"2025-07-01T11:34:59","slug":"usd-cad-forecast-as-the-us-dollar-index-dxy-crashes","status":"publish","type":"post","link":"https:\/\/quickassetsmarket.com\/index.php\/2025\/07\/01\/usd-cad-forecast-as-the-us-dollar-index-dxy-crashes\/","title":{"rendered":"USD\/CAD forecast as the US dollar index (DXY) crashes"},"content":{"rendered":"
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The Canadian dollar resumed its recent rebound after Canada and the United States restarted talks. The USD\/CAD exchange rate plunged to a low of 1.3600 on Tuesday, the lowest level in a week, and 8% below the highest level this year.<\/p>\n

Potential US and Canada trade deal<\/h2>\n

The main catalyst for the USD\/CAD crash this week was the restart of trade talks between the US and Canada. <\/p>\n

This situation occurred after Canada caved in and ended the planned introduction of a 3% digital tax that would have applied to US companies, including Meta Platforms, Alphabet, and Amazon. <\/p>\n

Canada ended this implementation a few days after Donald Trump ended the talks between the two countries. Without these talks, US tariffs on Canadian goods would have reset at a much higher rate when the 90-day deadline ended. <\/p>\n

Canada needs the trade deal because its economy is not doing well. The most recent data showed that the Canadian economy contracted by 0.1% in April, led by a 1.9% drop in the manufacturing sector.<\/p>\n

Canada\u2019s wholesale trade sector also contracted by 1.9% in April. This contraction was offset by a growth in the finance and insurance, and public administration sectors.<\/p>\n

Analysts expect the economy to contract again in May, potentially leading to negative growth in the second quarter. Most of this weakness is because of Trump\u2019s tariffs<\/a> <\/strong>on Canadian goods.<\/p>\n

The Bank of Canada (BoC) and the IMF have warned that the economy will slow this year. In a recent note, the BoC estimated that the Canadian economy will grow by 1.4% this year, while inflation will average 2.2% this year. <\/p>\n

Therefore, analysts anticipate that the Bank of Canada (BoC) will restart cutting interest rates to stimulate growth.<\/p>\n

US Dollar Index crash<\/h2>\n

The USD\/CAD exchange rate has also declined due to the ongoing decline in the US Dollar Index<\/a> (DXY). The index, which weighs the dollar against other currencies, has plunged to $96.7, its lowest level in years. It has plunged by over 12% from the year-to-date high, putting it into a correction. <\/p>\n

The dollar index has formed an inverse cup and handle pattern, along with a death cross, indicating further downside in the coming months.<\/p>\n

This crash has happened as investors predict that the Federal Reserve will cut interest rates soon as the impact of tariffs on inflation will be muted.<\/p>\n

The next key catalyst for the US\/CAD pair will be the upcoming manufacturing PMI numbers on Tuesday. These numbers will be followed by the upcoming nonfarm payrolls data on Thursday.<\/p>\n

USD\/CAD technical analysis<\/h2>\n
USD\/CAD price chart | Source: TradingView<\/a><\/figcaption><\/figure>\n

The daily chart shows that the USD\/CAD exchange rate has been in a strong bearish trend in the past few weeks, moving from a high of 1.4790 in February to the current 1.3600.\u00a0<\/p>\n

It recently crashed below the ascending trendline that connects the lowest swings since 2024. It also formed a death cross as the 50-day and 200-day Exponential Moving Averages (EMA) crossed each other. A death cross is a highly popular bearish pattern.<\/p>\n

Therefore, the USD\/CAD pair will likely continue falling as sellers target the key support at 1.3425, its lowest point in September last year. A move below that support level will point to more downside. <\/p>\n

The post USD\/CAD forecast as the US dollar index (DXY) crashes<\/a> appeared first on Invezz<\/a><\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

The Canadian dollar resumed its recent rebound after Canada and the United States restarted talks. The USD\/CAD exchange rate plunged to a low of 1.3600 on Tuesday, the lowest level in a week, and 8% below the highest level this year. Potential US and Canada trade deal The main catalyst for the USD\/CAD crash this <\/p>\n","protected":false},"author":1,"featured_media":41205,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":{"0":"post-41204","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-world"},"_links":{"self":[{"href":"https:\/\/quickassetsmarket.com\/index.php\/wp-json\/wp\/v2\/posts\/41204","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/quickassetsmarket.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/quickassetsmarket.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/quickassetsmarket.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/quickassetsmarket.com\/index.php\/wp-json\/wp\/v2\/comments?post=41204"}],"version-history":[{"count":0,"href":"https:\/\/quickassetsmarket.com\/index.php\/wp-json\/wp\/v2\/posts\/41204\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/quickassetsmarket.com\/index.php\/wp-json\/wp\/v2\/media\/41205"}],"wp:attachment":[{"href":"https:\/\/quickassetsmarket.com\/index.php\/wp-json\/wp\/v2\/media?parent=41204"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/quickassetsmarket.com\/index.php\/wp-json\/wp\/v2\/categories?post=41204"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/quickassetsmarket.com\/index.php\/wp-json\/wp\/v2\/tags?post=41204"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}