07:30 AM EDT, 09/18/2025 (MT Newswires) -- The Canadian dollar (CAD or loonie) has benefited from the US dollar's (USD) pronounced weakness in recent months, said Commerzbank.

Given the erratic nature of the United States' trade policy, this trend is likely to continue in the coming months, leading the bank to expect lower USD-CAD levels. However, this shouldn't distract from the fact that the Canadian real economy is being increasingly affected by developments in the U.S.

Much will depend, however, on how the trade conflict with the U.S. develops, stated Commerzbank. Although recent reports suggest that Canada and the U.S. are making progress on a possible trade deal, success is by no means guaranteed.

If a deal is reached that resolves the problems with the U.S., this would certainly bode well for the CAD, pointed out the bank. While a deal with the U.S. would likely alleviate some of the already-mentioned issues, it would probably not solve them fundamentally.

Until the uncertainties surrounding Canada's relationship with its southern neighbour are resolved, the Canadian dollar is likely to struggle, added Commerzbank.

As a consequence, the bank adjusted its forecast and now forecasts only a gradual USD/CAD downward movement. Against the euro (EUR), the CAD is likely to depreciate.

The bank sees USD/CAD at 1.37 at the end of this year, also at 1.37 at end March 2026, at 1.36 end of June, at 1.35 three months later and at 1.34 end December 2026. It predicts EUR/CAD at 1.67 at the end of this year, also at 1.69 at the end of June and September, while at 1.68 end December 2026.