Rabobank: The USD/CAD pair could reach this level!

Rabobank issued a research note on Tuesday discussing the outlook for the Canadian dollar in the upcoming period, indicating that the currency pair has reached the target of 1.40. The bank also predicted that the pair would reach the level of 1.42 during the first quarterly period of next year, continuing its upward trajectory to 1.46 by 2025, which is slightly lower compared to the increases seen in the Canadian dollar from 2016 to 2020. Additionally, Rabobank analysts clarified that the bullish outlook for the USD/CAD pair is driven by the interest rate differentials between the United States and Canada as expected by foreign exchange markets in 2025. The implication here is that Canada's monetary policy easing cycle is more aggressive compared to the interest rate cuts in the United States, and the gap between the two countries is likely to widen by next year, which may provide further support for the USD/CAD pair.