The USDCAD has spent the week trading in a narrow range as markets await the next decisive shove.
On the policy front, Prime Minister Carey dialed back some retaliatory tariffs, opening the door for further negotiations, though the news had little market impact.
Meanwhile, Bank of Canada Governor Tiff Macklem yesterday reiterated that the central bank will not revisit its 2% inflation target during next year’s policy framework review. He cautioned that steep new U.S. tariffs and the unpredictability of U.S. trade policy have reduced economic efficiency and heightened uncertainty. Macklem also warned of supply-side headwinds that could add upward pressure to inflation but noted the Bank’s use of scenario analysis allows for flexible policy decisions under a range of outcomes.
Price action in the USDCAD has mirrored this sense of caution and uncertainty. On the downside, buyers have consistently emerged within a swing area between 1.38127 and 1.38315, just above the rising 100-bar MA on the 4-hour chart at 1.38072 (see chart above). This zone has provided a solid floor, and it would take a decisive break below to tilt the bias more bearish.
On the topside, resistance is clearly defined on the hourly chart (see chart below). The 100-hour MA at 1.38579 capped yesterday’s rally and again drew sellers when tested today. A sustained move above this level would open the door for further upside momentum.
For now, the USDCAD remains caught between well-defined support and resistance levels, reflecting the broader uncertainty noted by the BoC. Traders will be watching closely for a breakout with momentum to establish the next directional move
