The BoC is
expected to keep rates unchanged at 2.75% today. As a reminder, the BoC cut interest
rates by 25 basis points to 2.75% as expected at the last meeting amid concerns
over weaker growth ahead due to the trade uncertainty and US tariffs. The
central bank emphasized a cautious approach to future decisions, balancing the
upward pressure on inflation against the downward pressure on weaker demand.
The
market sees a 57% probability of no change today and a total of 50 bps of easing by year-end.
The pair has been mainly driven by the USD weakness amid the trade tensions and it will likely continue to do so. In fact, the market focus is still on trade negotiations and today’s meeting with Japan could move the pair more than the BoC itself. Positive developments could see the greenback appreciating in the short term on the fact that rate cuts for the Fed would get priced out, but in the medium to long term, the USD will likely continue to depreciate as the path of least resistance for the Fed is for cutting rates.
USDCAD Technical Analysis – Daily Timeframe
On the daily chart, we can see that the price recently broke below the 2022 high around the 1.40 handle before pulling back to retest the level. This is where we can expect the sellers to step in with a defined risk above the level to keep pushing into the long term trendline around the 1.37 handle. The buyers, on the other hand, will want to see the price breaking higher to start targeting the downward trendline around the 1.42 handle.
USDCAD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the rejection around the 1.40 handle. That’s going to be the level to break for the buyers to start looking for higher highs. Due to the recent pullback, we have now a counter-trendline defining the bullish momentum. The buyers will likely lean on the trendline to position for a rally into the major downward trendline, while the sellers will look for a break lower to increase the bearish bets into new lows.
USDCAD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price is bouncing from a minor support zone around the 1.39 handle. On an intraday basis, buyers could split the position between the support and the counter-trendline targeting the 1.41 handle
