Bank of America
FX Outlook 2026: Structural Dollar Headwinds
LIVE5 December 2025USD bearish
Back to CurrenciesModerately Bearish
USD/CAD
USD-short proxy with trade risks
BofA Forecast Path
Cross-Firm Forecast Comparison
Key Drivers
USMCA outcome
BoC rate path
Oil prices
Housing market
Trade policy
All Firm Targets (Dec '26)
JPMModerately Bearish1.42
BARCModerately Bearish1.36
BofAModerately Bearish1.35
GSModerately Bullish1.35
INGModerately Bullish1.34
MSModerately Bullish1.34
MUFGModerately Bullish1.34
DBModerately Bullish1.32
Key Issues for 2026
1.USMCA renegotiation creates uncertainty
2.BoC easing weighing on carry
3.Oil price risk is two-way
4.Prefer as USD-short proxy rather than outright long
5.Housing market vulnerability
Analysis Summary
CAD faces headwinds from lower oil prices, BoC easing, and US trade policy uncertainty. USMCA renegotiation risk adds a tail risk premium. Prefer selling CAD as a USD-short proxy against European and commodity currencies.