March 18, 2025 at 09:05AM
Fundamental
Overview
The USD continues to remain
under pressure against most major currencies despite higher Core PCE estimates
following the US CPI and PPI reports, and a better-than-expected Retail
Sales data yesterday.
The market pricing for the
Fed went from expecting more than 80 bps of easing by year-end at the peak of
the risk-off sentiment to roughly 60 bps as of now. That didn’t provide a
pullback in the US Dollar selloff though. The focus now switched to the FOMC
decision due tomorrow where the Fed is expected to keep rates steady.
On the CAD side, the BoC cut interest rates by 25 basis points to 2.75% as
expected last week 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.
Governor Macklem acknowledged the economic uncertainty, and he warned
that a prolonged trade war could slow GDP growth, weaken the job market, and
push inflation higher, creating a difficult policy environment. The market sees
a 57% chance of no change at the upcoming meeting and a total of 47 bps of
easing by year-end.
USDCAD
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that USDCAD continues to mostly range between the 1.42 and 1.45 levels as
the uncertainty around tariffs remains high. There’s not much we can glean from
this timeframe, so we need to zoom in to see some more details.
USDCAD Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that as the price fell below the key 1.4365 level yesterday, the sellers
piled in with more conviction to target the bottom of the recent range around
the 1.4245 level. The buyers will likely step in around the 1.4245 level with a
defined risk below it to position for a pullback into the downward trendline.
USDCAD Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, there’s
not much else we can add here as the buyers will look to buy the dip around the
1.4245 level, while the seller will target a break below the level to extend
the drop into new lows. The red lines define the average daily range for today.
Upcoming Catalysts
Today we get the Canadian CPI report. Tomorrow,
we have the FOMC Policy Decision. On Thursday, we get the latest US Jobless
Claims figures. On Friday, we have the Canadian Retail Sales data.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
