Hold Expected! USDCAD Resumes Rally After Consolidation

Tank

Summary:

The Bank of Canada is expected to keep its benchmark policy rate unchanged at 2.25% on Wednesday.

BUY USDCAD

EXP

PENDING

1.40800

Entry Price

1.45000

1.39000

1.40855 -0.00697 -0.49%

Pips

PENDING

1.39000

Exit Price

1.40800

Entry Price

1.45000

Fundamentals

The Bank of Canada is expected to keep its benchmark policy rate unchanged at 2.25% on Wednesday. With signs of easing core inflation pressures and the economy rebounding from a technical recession, the central bank currently sees no need to raise rates further or to introduce additional stimulus measures. A survey shows that all 36 economists polled expect the Bank of Canada to hold rates steady, with most predicting the policy rate will remain unchanged at least through July 2027. The Bank of Canada will also release its quarterly Monetary Policy Report on the same day, updating its economic growth and inflation forecasts against the backdrop of fluctuating oil prices and ongoing U.S. trade uncertainty.

Federal Reserve Governor Christopher Waller stated that if future data continues to show inflation significantly above the 2% target, the Fed may need to raise interest rates in the near term, adding that U.S. monetary policy is currently at a critical turning point. He noted that the future direction of policy will depend on newly released data, particularly the Consumer Price Index, and that the Fed should not be complacent if inflation continues to worsen.

Technical Analysis

On the 4-hour chart for USD/CAD, the Bollinger Bands are widening downward, moving averages are diverging downward, and the downward momentum of the MACD has weakened somewhat; the pair is likely to test the area around the 200 EMA. The RSI stands at 40, indicating that market participants are predominantly selling. On the daily chart, the Bollinger Bands are narrowing, moving averages have flattened, 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. With the RSI at 55, the market is largely in a wait-and-see mode. Strategically, look to buy on dips.

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Trading Recommendation

Trading Direction: Buy

Entry Price: 1.408

Target Price: 1.45

Stop-Loss Price: 1.39

Support Levels: 1.39, 1.38, 1.37

Resistance Levels: 1.42, 1.45, 1.48

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Hold Expected! USDCAD Resumes Rally After Consolidation

Risk Disclosure