Bank of America has lowered its USD/CAD year-end forecast from 1.40 to 1.38, citing overly optimistic CAD pricing in April. While the pair may consolidate near 1.40 in the near term, BofA sees medium-term downside to 1.35 and recommends a 1-year RKO (reverse knock-out) put to express that view.
Key Points:
Revised Forecast: USD/CAD is now expected to end 2025 at 1.38 (previously 1.40), with potential to reach 1.35 in the medium term.
Drivers of CAD Strength: April’s rally was fueled by a BoC rate cut pause, expectations for fiscal expansion, and anticipated investment inflows—factors BofA believes may have driven temporary CAD overvaluation.
Near-Term Outlook: BofA sees USD/CAD trading sideways around 1.40 over the next two quarters before gradually declining.
Trade Strategy: A 1-year RKO put is favored to cheaply express a bearish view while taking advantage of current skew pricing.
Macro Risk: The main risk is a North American recession in 2025, which would trigger renewed USD strength and invalidate the trade.
Conclusion:
BofA remains moderately bearish USD/CAD into 2025, targeting 1.35 medium-term, but sees near-term consolidation. Their preferred expression is a cost-efficient options strategy, allowing participation in a slow USD decline without overexposing to short-term volatility.
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This article was written by Adam Button at www.forexlive.com.Hence then, the article about bofa we revise usd cad forecasts lower for the medium term was published today ( ) and is available on forex live ( Middle East ) The editorial team at PressBee has edited and verified it, and it may have been modified, fully republished, or quoted. You can read and follow the updates of this news or article from its original source.
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