Canadian Dollar Weakens as Yield Gap Widens Between U.S. and Canada

The Canadian Dollar (CAD) continued to lose ground on Friday as widening yield spreads between the United States and Canada weighed on the currency. Despite upbeat global sentiment, the CAD struggled to find direction, according to Scotiabank’s Chief FX Strategists Shaun Osborne and Eric Theoret.

Canadian Dollar Under Pressure Ahead of Macklem’s Speech

The Canadian Dollar faced mild downward pressure as investors turned cautious before Bank of Canada (BoC) Governor Tiff Macklem’s scheduled speech on the Canadian economic outlook at 1:30 p.m. ET.

The central bank confirmed that Macklem’s appearance will not feature a formal speech, Q&A session, or media access. Analysts expect the Governor to repeat his recent comments on sluggish economic growth, trade-related headwinds, and the limited ability of monetary policy to offset tariff impacts.

This uncertainty has kept the CAD on edge, with traders looking ahead to tomorrow’s Federal Budget announcement for further clues about fiscal direction and potential market reactions.

Technical Signals Favor a Stronger U.S. Dollar

From a technical analysis standpoint, the Canadian Dollar appears vulnerable to further weakness. The U.S. Dollar (USD) rebounded strongly from mid-week lows, triggering several bullish chart patterns — including an outside range, a morning star, and a hammer formation across intraday, daily, and weekly timeframes.

These signals have boosted optimism for continued USD/CAD gains. Analysts at Scotiabank noted that a clear break above the 1.4080 resistance level could pave the way toward 1.4150–1.4160, aligning with key retracement zones. On the downside, support levels are seen near 1.3975–1.4000.

If bullish momentum continues, the pair may extend toward new highs next week, suggesting the Canadian Dollar could face additional selling pressure in the short term.

Make money without lifting your fingers: Start using a world-class auto trading solution.

EightCap, your trusted Partner in CFDs, Cryptocurrencies and Stocks.