While many anticipate the U.S. dollar to continue to strengthen against foreign currencies, especially with the Federal Reserve targeting higher rates, the Canadian dollar and currency-related exchange traded fund may outperform the greenback.

Many currency watchers anticipate the USD to appreciate against foreign currencies, albeit at a slower pace.

“The move may be more muted than over the past 18 months but the dollar will rise further in 2016—because it can,” according to Vincent Chaigneau, global head of rates and FX strategy at Société Générale, Bloomberg reports. “The U.S. economy is best positioned to withstand a strong currency, which will help contain home-born inflation.”

However, Chaigneau argues that the Canadian Dollar could outpace the King Dollar ahead.

“The Canadian dollar is the only G10 currency we expect to outperform the U.S. dollar in 2016,” Chaigneau said, estimating a USD/CAD at 1.31 by the end of 2016.

Currently, the greenback is sitting at CAD1.3852.

The PowerShares DB U.S. Dollar Index Bullish Fund (NYSEArca: UUP), which tracks the price movement of the U.S. dollar against a basket of currencies, including a 9.1% tilt toward the Canadian dollar, has gained 6.6% year-to-date. The euro, which makes up about a 57.6% weight in UUP, has been the greatest factor in affecting the U.S. dollar ETF’s price movements. [How Long Will The Dollar ETF Bull Market Last?]

Meanwhile, the CurrencyShares Canadian Dollar Trust (NYSEArca: FXC), which tracks the Canadian dollar’s movement against the U.S. dollar, declined 16.2% so far this year. [Country ETFs That Are Most Sensitive To Oil Declines]

The Canadian dollar has been suffering as oil, a major export for the economy, declined to 11-year lows. However, SocGen believes that oil-related currencies could recover next year as oil prices rebound. [OPEC Tries to Give Oil ETFs Some Good Cheer]

However, the road toward a stronger loonie may still be filled with hurdles, with Steven Englander, head of G10 FX strategy at Citigroup, warning that “there is a high risk that USDCAD will have to go well above 1.40 in the first half.”

CurrencyShares Canadian Dollar Trust

For more information on the loonie, visit our Canadian dollar category.

Max Chen contributed to this article.