USD\/CAD experienced a slight dip during the current down cycle, even though the CAD displayed marginal softness. The CAD has shown resistance against typical December trends, where it usually exhibits a neutral performance toward the end of the year.<\/p>\n
Historically, late-year patterns have not favoured the CAD, with losses balancing out by December. The CAD’s performance is mixed, with the worst outcomes in November and better results in April. Despite recent gains, USD\/CAD is trading just under the estimated fair value of 1.3794.<\/p>\n
Additional gains for the USD are seemingly limited, as recent statements from Gov. Macklem did not introduce new monetary policies. He reiterated that the benchmark rate of 2.25% remains suitable and that inflation pressures are under control.<\/p>\n
US Dollar gains from recent lows pressure the short-term downtrend. Although stretched, the USD selloff might see a mild correction above 1.3790\/00 towards 1.38s, and support rests at 1.3725\/30. This analysis is provided by the FXStreet Insights Team, which offers market observations from experts and internal analysts.<\/p>\n
The Bank of Canada holding its policy rate steady at 2.25% creates a clear divergence from the Federal Reserve, which just cut rates for a third time on December 10. This difference in monetary policy should limit significant US dollar strength against the Canadian dollar. We see the USD\/CAD pair finding it difficult to sustain any meaningful rally above the 1.3800 mark.<\/p>\n
This outlook is reinforced by recent economic data, as Canadian core inflation has remained sticky, holding at 2.9% in the November 2025 report. In contrast, US inflation has shown more consistent signs of cooling, giving the Fed room to ease policy. Therefore, we believe using options to bet against a significant move above 1.3850 or selling into rallies presents a viable strategy for the coming weeks.<\/p>\n
While December is often a mixed month for the CAD, we are seeing unusual strength this year. Looking forward, we should remember that seasonal trends have historically favored the Canadian dollar in the spring. April has reliably been the CAD\u2019s strongest month, a pattern that has held true in eight of the last ten years.<\/p>\n
Another clear opportunity appears in the British pound, where soft inflation data has all but guaranteed a rate cut by the Bank of England this week. The latest UK Consumer Price Index came in at a two-year low of 2.2%, cementing expectations for easier policy. This makes buying put options on the GBP\/USD an attractive trade heading into the announcement.<\/p>\n
The broader market is clearly signaling a flight to safety, with gold prices rising while riskier assets like cryptocurrencies are selling off. The VIX, a key measure of market fear, has jumped from 14 to over 19 in the past week. This suggests that holding some protective put options on major stock indices could be a prudent hedge against unexpected volatility during the year-end period.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" USD\/CAD dips slightly as CAD resists typical December softness; additional USD gains appear increasingly limited.<\/p>\n","protected":false},"author":62,"featured_media":17023,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-37126","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/37126","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=37126"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/37126\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17023"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=37126"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=37126"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=37126"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}