Decision Time! USD/CAD Sits on Key Support

Summary:

The market generally believes that core inflationary pressures have eased somewhat recently, and that the economy has rebounded after contracting for two consecutive quarters and entering a technical recession.

BUY USDCAD

EXP

TRADING

1.40514

Entry Price

1.45000

1.38000

1.40540 -0.00029 -0.02%

0.0

Pips

Flat

1.38000

Exit Price

1.40514

Entry Price

1.45000

Fundamentals

The Bank of Canada is expected to keep its benchmark policy rate unchanged at 2.25% in its interest rate decision on Wednesday. All 36 economists surveyed expect the central bank to hold rates steady, with most respondents believing that a policy rate adjustment is unlikely until at least July 2027. Money market pricing also reflects the widespread market expectation of no rate change, with a current probability of approximately 91% that the rate will remain at 2.25% and only a 9% probability of a 25-basis-point rate cut.

The latest U.S. inflation data for June shows that the Consumer Price Index (CPI) rose 3.5% year-over-year, down from 4.2% in May and below market expectations of 3.8%; it fell 0.4% month-over-month, outperforming market expectations. The core CPI, excluding food and energy, rose 2.6% year-over-year, down from the previous reading of 2.9%, and remained flat month-over-month, indicating that underlying inflationary pressures continue to ease.

Technical Analysis

On the 4-hour chart for USD/CAD, the Bollinger Bands are widening downward, and the moving averages are diverging downward, indicating a high probability that the pair will test the round number level. The RSI stands at 27, signaling that the market has entered oversold territory. On the daily chart, the Bollinger Bands are narrowing, the moving averages are flattening, and following a MACD death cross, the fast and slow lines are retracing toward the 0-line—though they remain some distance away, suggesting the correction is not yet complete. The RSI stands at 42, indicating that market sentiment is predominantly bearish. Strategically, look to buy on dips.

Decision Time! USD/CAD Sits on Key Support_1

Decision Time! USD/CAD Sits on Key Support_2

Trading Recommendation

Trading Direction: Buy

Entry Price: 1.405

Target Price: 1.45

Stop-Loss Price: 1.38

Support Levels: 1.39, 1.38, 1.37

Resistance Levels: 1.42, 1.45, 1.48

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Decision Time! USD/CAD Sits on Key Support

Risk Disclosure