USD Dominance Returns as Fed Hikes Interest Rates
The USD/CAD and USD/MXN exchange rates are expected to continue reflecting the shift in strength dynamics in North America, as the U.S. dollar regains its footing.
This is due to new expectations of a more aggressive monetary policy stance by the Federal Reserve, which could lead to higher interest rates in the United States.
In contrast, both Canada and Mexico have maintained more cautious approaches, with the Bank of Canada keeping interest rates unchanged at 2.25% since October 2025, and Banco de México reducing its benchmark rate from 7.00% to 6.5% earlier this year.
The divergence between these central banks' monetary policies could lead to a more significant degree of indecision or even sustained bullish pressure in the USD/CAD and USD/MXN exchange rates over the coming months.