USD/CAD Holds Above 1.40 as Markets Price Softer Canadian CPI and Delayed U.S. Macro Flow

Summary:

The Canadian dollar held marginal gains on Monday, with USD/CAD locked in a tight range ahead of key Canadian CPI and long-delayed U.S. data releases.

BUY USDCAD

Close Time

CLOSED

1.40300

Entry Price

1.41500

1.39500

1.40202 -0.00266 -0.19%

20.0

Pips

Profit

1.39500

1.40500

Exit Price

1.40300

Entry Price

1.41500

The Canadian Dollar struggled to extend its early strength on Monday, holding only modest gains against a slightly firmer U.S. Dollar as investors braced for a busy week of delayed economic releases from both sides of the border. The USD/CAD pair continued to oscillate within the narrow 1.4000–1.4050 band that has dominated recent sessions, reflecting a broader environment of subdued risk appetite and currency markets stuck in consolidation mode.

Despite the cautious tone across global markets, the U.S. Dollar maintained a slight advantage, buoyed by defensive flows as traders awaited clarity on the direction of U.S. growth and the Federal Reserve’s policy outlook. With several key data releases only now being published after government delays, investors have been reluctant to take decisive positions, leaving most major pairs to drift within familiar territory.

The highlight of the North American session is Canada’s October Consumer Price Index (CPI), a report that may help sharpen expectations for the Bank of Canada’s next steps after an extended period of tightening. Headline inflation is forecast to rise 0.2% month-on-month, a modest pick-up from September’s 0.1%. However, the annual rate is expected to cool to 2.1%, down from 2.4%, marking progress toward the central bank’s 2% target.

A softer inflation print would reinforce the Bank of Canada’s recent shift toward a more cautious stance, potentially weighing on the Canadian Dollar by strengthening expectations that further rate hikes are unlikely—and that rate cuts may come sooner next year if disinflation continues. Still, with the labour market showing signs of resilience and energy prices stabilizing, investors remain divided on whether the BoC will pivot as quickly as bond markets currently suggest.

On the U.S. side, attention turns to the New York Federal Reserve’s Empire State Manufacturing Index, which is expected to decline to 6.0 in November from October’s reading of 10. While still in positive territory, the slowdown would add to evidence that the U.S. industrial sector continues to face pressure from weaker global demand and tighter financial conditions.

Later in the session, the U.S. Census Bureau is set to release construction spending data for August—the first in a backlog of delayed economic updates. Markets expect a 0.1% decline, matching the prior month’s contraction. While not typically a market-moving release, the data may help investors refine their understanding of U.S. economic momentum as the fourth quarter progresses.

Markets are watching whether the delayed data will reveal a still-resilient economy—or show signs of fatigue that could push the Fed closer to a dovish tilt. For now, Fed officials continue to signal a data-dependent approach, leaving the USD sensitive to even small surprises.

Technical Analysis

From a technical perspective, USD/CAD has seen intraday gains, supported by a dominant short-term bullish trend and steady trading along an upward-sloping trend line. The pair’s resilience above the key psychological 1.4000 level underscores the strength of underlying demand, with momentum indicators flashing constructive signals following a reset from overbought levels.

The Relative Strength Index (RSI) shows renewed positive overlap, hinting that bulls may attempt another push toward the upper boundary of the recent range near 1.4050. A clean break above that level could open a broader pathway toward 1.4150 and beyond, assuming U.S. Dollar strength persists.

TRADE RECOMMENDATION

BUY USDCAD

ENTRY PRICE: 1.4030

STOP LOSS: 1.3950

TAKE PROFIT: 1.4150

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