Tag: USD/CAD

• The USD/CAD forecast shows market participants weighing employment figures from Canada and the US. 

• The economy added 139,000 new jobs in May.

• Canada reported an unexpected increase in employment of 8,800.

The USD/CAD forecast shows market participants weighing employment figures from Canada and the US. At the same time, traders are gearing up for crucial US inflation figures this week that will shape the outlook for Fed rate cuts. 

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Last week, the US and Canada released upbeat monthly employment figures. In the US, the economy added 139,000 new jobs in May, above the forecast of 130,000. Meanwhile, average hourly earnings jumped, and the unemployment rate held steady at 4.2%. The report led to a decline in Fed rate cut expectations.

Experts were expecting weakness in the US economy due to Trump’s aggressive tariffs. However, the economy has been more resilient than expected so far. As a result, the Fed might now focus more on the state of inflation. 

On the other hand, Canada reported an unexpected increase in employment of 8,800. Estimates had shown the economy losing 11,900 jobs. Meanwhile, the unemployment rate increased to 7.0% as expected. Last week, the Bank of Canada paused rates a second time. If the economy remains strong, policymakers might remain cautious. 

USD/CAD key events today

Market participants do not expect any key economic releases from the US or Canada. Therefore, the pair might consolidate.

USD/CAD technical forecast: Bullish RSI divergence

On the technical side, the USD/CAD price has rebounded to retest a solid resistance zone comprising the 30-SMA and the 1.3701 key level. However, the price still trades below the SMA with the RSI under 50, suggesting a bearish bias. 

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Initially, the price was dropping in a downtrend until it reached the 1.3650 key level. Although this was a new low for the price, the RSI made a higher one, indicating a bullish divergence. Bears were much stronger when they hit the previous low at the 1.3701 level. 

The bullish divergence might allow bulls to take charge for a deep pullback or a reversal. This would mean breaking above the current resistance zone. Such a move would clear the path to the 1.3850 resistance. On the other hand, the downtrend will continue if the resistance holds.

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• The USD/CAD forecast shows a cautious Bank of Canada that has boosted the Canadian dollar. 

• Market participants are pricing a 45% chance of a BoC rate cut in July.

• Data revealed weaker-than-expected US private employment.

The USD/CAD forecast shows a cautious Bank of Canada that has boosted the Canadian dollar. At the same time, downbeat data from the US weighed on the dollar, allowing most of its peers to climb. 

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The Bank of Canada kept rates unchanged as expected on Wednesday. It was the second pause as policymakers wait to see the full impact of Trump’s trade policies. The pause allowed the loonie to climb against the dollar. At the same time, rate cut expectations eased slightly after the meeting. Currently, market participants are pricing a 45% chance of a rate cut at the July meeting. 

Meanwhile, the US dollar collapsed against its peers after data revealed weaker-than-expected US private employment. The private sector added only 37,000 new jobs in May, compared with forecasts of 111,000 jobs. The miss indicated an unexpected weakness in the labor market. It raised concerns of more downbeat employment figures that could pressure the Fed to cut interest rates.

A separate report revealed that business activity in the US services sector contracted. The ISM PMI came in at 49.9 compared to estimates of 52.0. This followed another report showing further contraction in the manufacturing sector. All these point to weakness in the economy as a result of Trump’s tariffs.

USD/CAD key events today

USD/CAD technical forecast: RSI divergence suggests weakness

On the technical side, the USD/CAD price has broken below the 1.3701 key support level with a solid bearish candle. The move has allowed bears to retest the 1.3650 key level. Moreover, the price now sits far below the 30-SMA, with the RSI near the oversold region, supporting a bearish bias.

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However, although the price has made a lower low, the RSI has made a slightly higher one, a sign that bearish momentum is weaker. This weakness might allow bulls to return for a deep pullback. In such a case, the price might bounce to break above the 30-SMA.

However, if bears remain in the lead, USD/CAD will stay below the SMA. Moreover, a break below the 1.3650 level would strengthen the bearish bias.

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• The USD/CAD forecast points south as the loonie strengthens ahead of a likely BoC pause.

• Market participants are waiting to see developments in trade negotiations.

• The US is set to release the nonfarm payrolls report on Friday.

The USD/CAD forecast points south as the loonie strengthens ahead of a likely BoC pause. At the same time, the US dollar was fragile as traders watched developments in  trade negotiations. Moreover, market participants were cautious ahead of the crucial nonfarm payrolls report.

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After stronger than expected economic data from Canada, traders expect the Bank of Canada to pause again on Wednesday. The central bank paused its easing cycle durig the last meeting, allowing the loonie to gain. Initially, it had been one of the most aggressive in lowering borrowing costs. However, this has changed.

Traders will also pay attention to the messaging on future moves. A dovish message could hurt the Canadian dollar. On the other hand, a cautious tone could further support Canada’s currency. 

Meanwhile, the dollar was weak as traders preferred to stay on the sidelines. Market participants are waiting to see developments in trade negotiations between the US and its partners. Trump called on these countries to provide offers for negotiations by Wednesday. At the same time, the US is set to release the nonfarm payrolls report on Friday. This will shape the outlook for Fed rate cuts.

USD/CAD key events today

• US ADP nonfarm employment change
• BoC rate statement
• US ISM services PMI
• BoC press conference

USD/CAD technical forecast: Bears cracking 1.3701 support

On the technical side, the USD/CAD price is retesting the 1.3701 support level. It trades far below the 30-SMA, with the RSI in bearish territory below 50. Therefore, the bearish bias is strong.

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The price recently resumed its decline after bears took charge near the 1.3850 resistance level. However, their first attempt at the 1.3701 support failed and the price bounced higher. At the moment, the price is making another attempt at this level. A break below will allow bears to reach the 1.3650 support. 

However, if the level holds firm again, the price will likely bounce higher to retest the 30-SMA. The bearish bias will remain if the price stays below the SMA. On the other hand, a break above the SMA line would allow USD/CAD to climb to the 1.3850 level. 

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• The USD/CAD forecast suggests solid bearish sentiment.

• Canada’s GDP expanded by 2.2% in the first quarter, beating estimates of a 1.7% increase.

• Trump threatened to increase tariffs on aluminium and steel imports to 50%.

The USD/CAD forecast suggests solid bearish sentiment as the Canadian dollar extends gains after an upbeat GDP report. At the same time, the dollar remains weak amid Trump tariff tensions. However, cooler-than-expected US inflation figures eased Fed rate cut expectations.

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The Canadian dollar strengthened on Friday after data revealed a better-than-expected performance in Canada’s economy. The GDP expanded by 2.2% in the first quarter, beating estimates of a 1.7% increase. The upbeat figures eased economic worries, lowering expectations for a Bank of Canada rate cut this week. 

At the last meeting, the Bank of Canada paused its aggressive rate-cutting cycle. However, experts had expected the central bank to resume its rate cuts. Nevertheless, the economy has performed better than expected. Consequently, market participants are pricing a 75% chance of the Bank of Canada pausing again this week. 

On the other hand, the dollar was fragile as market participants worried about Trump’s aggressive tariffs. The US president threatened to increase tariffs on aluminium and steel imports to 50%. Such a move would increase trade tensions with its partners. At the same time, tensions with China over tariffs on critical minerals have dampened appetite for US assets. 

Elsewhere, data revealed that inflation in the US eased to 2.1% in April from the previous reading of 2.3%. The report eased Fed rate cut expectations.

USD/CAD key events today

• ISM Manufacturing PMI
• Fed Chair Powell Speaks

USD/CAD technical forecast: Overwhelming bearish pressure

On the technical side, the USD/CAD price has broken below the pivotal 1.3701 support level, strengthening the bearish bias. The price trades well below the 30-SMA, with the RSI in the oversold region, showing bears have a strong lead. Initially, the price reversed to the downside when it met the 1.4000 key resistance level.

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However, the downtrend paused when the price reached the 1.3701 support level, allowing bulls to return. As a result, the price rebounded and broke above the 30-SMA. However, bulls were not strong enough to sustain a move above the SMA. Consequently, the price broke back below the SMA. 

Currently, bulls have reached a lower low, confirming a continuation of the downtrend. A clean break below 1.3701 will allow USD/CAD to retest lower support levels.

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• The USD/CAD forecast indicates a growing likelihood that Trump’s tax bill will be passed into law.

• Traders are pricing a 67% chance of a Fed rate cut in September.

• Market participants are pricing a 27% chance of a BoC rate cut in June.

The USD/CAD forecast indicates a growing likelihood that Trump’s tax bill will be passed into law, increasing the US government’s debt and hurting the dollar. Meanwhile, in Canada, BoC rate cut expectations have fallen significantly, supporting the loonie. 

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The US dollar fell on Thursday and Friday after Trump’s tax bill passed through the House of Representatives. This development increased US fiscal health worries, prompting investors to dump US assets. On Monday, Moody’s cut the US government’s credit rating due to its growing debt. The move hurt investor confidence. If Trump’s bill passes, it will increase the government’s debt, further shaking confidence in the economy. 

Furthermore, the fiscal worries overshadowed a report on Thursday showing an improvement in US business activity. Fed policymakers are still cautiously watching incoming data for signs of weakness after Trump’s tariffs. Downbeat economic data will increase pressure on the central bank to lower borrowing costs. At the moment, traders are pricing a 67% chance of a cut in September. 

Meanwhile, BoC rate cut bets continued falling after Canada’s hotter-than-expected core inflation figures. Market participants are pricing a 27% chance of a rate cut in June, meaning there is a higher likelihood of a pause. However, policymakers will keep studying incoming data. 

USD/CAD key events today

• Canada core retail sales m/m
• Canada retail sales m/m

USD/CAD technical forecast: Bears eye the 1.3800 support level

On the technical side, the USD/CAD price has continued its slide after breaking out of its triangle pattern. The price trades well below the 30-SMA, while the RSI is nearing the oversold region. This shows the bearish bias is strong. 

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After the breakout, the price paused its decline to make a lower high. At the moment, bears have returned and are about to break below the previous low. Such a move would strengthen the bearish bias. Moreover, a strong move could push the price below the 1.3800 level, confirming a new downtrend.

On the other hand, if the 1.3800 support holds firm, the price might bounce to retest the 1.3900 resistance level. Still, the bearish bias will hold if the price remains below the 30-SMA.

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• The USD/CAD price analysis indicates a lower likelihood of a BoC rate cut in June.

• Core inflation in Canada was hotter than expected.

• Fed policymakers maintained that the economic outlook was uncertain.

The USD/CAD price analysis indicates a lower likelihood of a Bank of Canada rate cut in June, which is pushing the Canadian dollar higher. At the same time, the dollar was fragile after Fed policymakers maintained that the risk of stagflation in the US remained high after Trump’s policy changes. 

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Data on Tuesday revealed that inflation in Canada fell by 0.1% as expected. However, core inflation was hotter than expected. The median CPI increased by 3.2% compared to the forecast of 2.9%. Meanwhile, the trimmed CPI came in at 3.1%, well above the forecast of a 2.8% increase. The upbeat figures boosted the Canadian dollar. Moreover, the numbers lowered the likelihood of a BoC rate cut in June. 

Before the report, traders were pricing a 65% chance of a June rate cut. However, that dropped to 33% after the report. At the last meeting, the BoC paused its easing. With inflation still hot, they might pause again in June. 

On the other hand, Fed policymakers maintained that the economic outlook was uncertain. Fed’s Alberto Musalem noted that despite the recent trade truce between China and the US, the labor market could weaken further. At the same time, inflation might increase.

USD/CAD key events today

Market participants do not expect any key economic releases from the US or Canada. Therefore, traders will keep digesting Canada’s inflation report.

USD/CAD technical price analysis: Triangle breakout signals new decline

USD/CAD technical price analysis

On the technical side, the USD/CAD price has broken out of its triangle pattern. At the same time, the price has broken below the 1.3900 support level, making a lower low and confirming a new direction. The bearish bias is strong with the price well below the 30-SMA and the RSI near the oversold region. 

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Initially, the price paused its rally and started trading in a triangle pattern below the 1.4000 key level. Eventually, the price broke out on the downside to start a new downtrend. Bears are now targeting the 1.3800 support level. 

However, before that, the price might pull back to retest the triangle before collapsing to fresh lows. The decline will continue as long as the price holds its position below the 30-SMA and the RSI stays under 50.

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• The USD/CAD price analysis shows strength in the Canadian dollar.

• Economists are predicting a 0.1% decrease in Canada’s inflation.

• Market participants are watching fiscal developments in the US.

The USD/CAD price analysis shows strength in the Canadian dollar ahead of crucial inflation figures from Canada. Meanwhile, the dollar remained fragile after a credit rating downgrade for the US government. At the same time, market participants are on edge ahead of a vote on Trump’s tax cuts bill.

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The loonie was strong on Tuesday as all eyes focused on Canada’s inflation report. The last reading revealed a 0.3% increase in inflation. This time, economists are predicting a 0.1% decrease in inflation.  A softer-than-expected number will increase pressure on the Bank of Canada to lower borrowing costs, hurting the loonie. On the other hand, an upbeat report would further strengthen the Canadian dollar.

Meanwhile, market participants are watching fiscal developments in the US. Lawmakers will soon vote on a tax cuts bill that could cause volatility in the financial markets. On Monday, Moody’s downgraded the US government’s credit rating due to its growing debt. If Trump’s bill passes, it will further increase the debt burden, hurting investor confidence in US assets. 

At the same time, market participants are waiting for more trade deals with the US. However, progress has stalled since the trade truce between the US and China.

USD/CAD key events today

• Canada CPI m/m
• Canada median CPI y/y
• Canada trimmed CPI y/y

USD/CAD technical price analysis: Bears gear up for a triangle breakout

On the technical side, the USD/CAD price trades below the 30-SMA, with the RSI under 50. This suggests a bearish bias. However, on a larger scale, the price is caught in a triangle pattern between the 1.3900 support and the 1.4000 resistance levels. 

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Initially, the price made an impulsive bullish move that paused at the 1.4000 key psychological level. It then entered a corrective move that presented itself as a triangle pattern. Currently, bears are in the lead within the triangle. Therefore, they might try to break out of the pattern. 

Still, bears would have to break below the 1.3900 key support to confirm a new direction. Otherwise, bulls will return to retest the 1.4000 key resistance. A break above this level would confirm a continuation of the previous uptrend.

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• The USD/CAD price analysis shows increasing pressure on the Fed to lower interest rates.

• US data revealed softer-than-expected wholesale inflation and weaker consumer spending.

• Oil collapsed on Thursday after Trump announced a likely nuclear deal with Iran.

The USD/CAD price analysis shows increasing pressure on the Federal Reserve to lower interest rates. As a result, the dollar is fragile against most of its peers. However, gains for the Canadian dollar remained subdued due to the recent collapse in oil prices. 

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Data from the previous session revealed softer-than-expected wholesale inflation and weaker consumer spending in the US. The PPI unexpectedly dropped by 0.5%. Meanwhile, economists had expected a 0.2% increase. Previously, data had also shown cooler consumer inflation. However, Powell has been expecting a spike due to Trump’s tariffs. Therefore, he might remain cautious for a bit longer.

A separate report revealed that retail sales increased by 0.1%. Although it was slightly higher than the forecast, it was a sharp drop from the previous 1.7% increase. Weaker consumer spending points to a slowdown in the economy that could further pressure the Fed. 

The economic figures weighed on the dollar, allowing the loonie to rise. However, a sharp decline in oil kept a lid on gains. Oil collapsed on Thursday after Trump announced a likely nuclear deal with Iran. Such an outcome would add supply to an already loose market.

USD/CAD key events today

• Prelim UoM Consumer Sentiment
• Prelim UoM Inflation Expectations

USD/CAD technical price analysis: Bulls struggle to break 1.4000 resistance

On the technical side, the USD/CAD price has pulled back to retest the 30-SMA support after failing to break above the 1.4000 key psychological level. However, the bullish bias remains intact since the price sits slightly above the SMA with the RSI above 50. 

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USD/CAD has come from a long consolidation. Bulls took charge when the price broke above the range resistance level. At the same time, the price has maintained its position above the SMA, indicating the start of a bullish trend. Therefore, bulls might soon retest the 1.4000 key resistance level. A break above will allow the price to climb to the 1.4100 level. This would strengthen the bullish bias. 

However, if the 1.4000 resistance holds firm, the price might start consolidating between the 1.3900 support and the 1.4000 resistance.

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• The USD/CAD forecast points to strength in the oil markets, which is boosting the loonie.

• China and the US will hold trade talks on Saturday.

• The Fed will likely keep rates on hold.

The USD/CAD forecast points to strength in the oil markets due to hopes of a trade deal between China and the US. As a result, the commodity-sensitive Canadian dollar gained. However, the move was subdued as market participants looked forward to the FOMC policy meeting.

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Oil prices rose Wednesday after reports that China and the US will hold talks on Saturday. The news raised hopes of an end to the trade war between the two countries. Market participants have remained cautiously hopeful for a de-escalation of this trade war. It has significantly reshaped the outlook for the global economy. 

Experts are forecasting weaker growth, which will impact oil demand. Canada is a major exporter of oil. Therefore, lower oil prices hurt the loonie. However, talks between China and the US have raised hopes of a better future for oil and Canada’s economy. 

Meanwhile, the US economy showed resilience in April, lowering expectations for a Fed rate cut in June. Employment was stronger than expected, and business activity in the services sector continued expanding. 

The Fed will likely keep rates on hold. However, traders are pricing the first cut in July. Trump announced a new tariff on the film industry on Sunday. If he continues his campaign, the US economy will suffer, and the Fed might be forced to cut interest rates.

USD/CAD key events today

• Federal Funds Rate
• FOMC Statement
• FOMC Press Conference

USD/CAD technical forecast: Bearish breakout shows weak momentum

On the technical side, the USD/CAD price has broken below the 1.3900 support level. At the same time, it has broken out of its consolidation area between the 1.3900 support and the 1.4102 resistance. However, the breakout has been weak. The price is still clinging to the 30-SMA.

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Meanwhile, the RSI still shows a bullish divergence, indicating fading momentum. If bears are weak, they might not sustain a move lower for longer before bulls return. Still, USD/CAD might soon reach the 1.3800 support. 

However, a break above the SMA will signal a bullish sentiment shift. The trend will only change when the price starts making higher highs and lows. Otherwise, bears will regain enough momentum to continue the downtrend.

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• The USD/CAD outlook shows renewed tariff uncertainty in the US, dragging the dollar lower. 

• The greenback rebounded last week after Trump said there was significant progress in trade talks.

• Business activity in the US services sector expanded further.

The USD/CAD outlook shows renewed tariff uncertainty in the US, dragging the dollar lower. The greenback fell against its peers on Monday after Trump announced new film tariffs. Meanwhile, market participants were gearing up for the FOMC policy meeting.

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On Sunday, Trump announced a 100% tariff on all films made outside the US. This move dashed hopes of the US president taking a softer stance on trade policies. As a result, the dollar dropped. 

Last week, the greenback rebounded after Trump said there was significant progress in trade talks. He said the US would soon sign trade deals with several countries, including India. However, market participants are still waiting for this. Furthermore, the trade war between China and the US continues to hurt both economies. Trump has said several times that the two countries were getting closer to a deal. However, progress has stalled. A re-escalation of tariff uncertainty could weigh on investor confidence and the dollar again. 

However, data on Monday revealed that business activity in the US services sector expanded further, easing fears of a recession. The report followed an upbeat monthly employment report. As a result, Fed June rate cut bets have dropped. Market participants are now pricing only a 37% chance of such a move. 

Meanwhile, the Fed will likely keep interest rates unchanged at the meeting this week.

USD/CAD key events today

• Federal Funds Rate
• FOMC Statement
• FOMC Press Conference

USD/CAD technical outlook: Bears struggle to break out of consolidation

On the technical side, the USD/CAD price remains in a tight range between the 1.3800 support and the 1.3900 resistance. After a sharp decline, bearish momentum weakened when the price reached the 1.3800 support. The RSI made a bullish divergence, signaling a looming reversal.

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Within the range, the price trades nearer the support, meaning bears might attempt a breakout. A break below the range support will confirm a continuation of the previous downtrend. On the other hand, if support holds firm, bulls will return to retest the resistance. Given the RSI divergence, a bullish breakout is more likely. Such a move would allow USD/CAD to retest the 1.4100 resistance. 

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• The USD/CAD forecast indicates a declining US economy.

• Private employment in the US was lower than expected in March.

• The US GDP report revealed that the economy contracted by 0.3%. 

The USD/CAD forecast indicates a declining US economy, putting pressure on the Federal Reserve to lower interest rates in June. At the same time, Canada’s economy unexpectedly contracted, increasing the chances that the BoC will resume its easing cycle.

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Data on Wednesday revealed that private employment in the US was lower than expected. The economy added 62,000 jobs compared to forecasts of 114,000. The decline pointed to weaker demand in the labor market in April, likely due to Trump’s tariffs. 

Meanwhile, the Advance US GDP report revealed that the economy contracted by 0.3%. Economists had expected a 0.3% expansion. However, the decline was not as big as most experts had feared. Some major banks had predicted an over 1% contraction in the economy. Consequently, the decline in the dollar was limited. 

A separate report showed the core PCE was unchanged. Meanwhile, economists had expected a 0.1% increase. The downbeat data, combined with softer-than-expected inflation, increased expectations for a Fed rate cut in June. 

On the other hand, data from Canada revealed that the economy contracted by 0.2% compared to expectations of no change. This might also pressure the Bank of Canada to return to rate cuts after pausing at the last meeting.

USD/CAD key events today

• US unemployment claims
• ISM manufacturing PMI

USD/CAD technical forecast: Bears losing momentum

On the technical side, the USD/CAD price is caught in a sideways move near the 1.3800 support level. Currently, the price trades below the 30-SMA, indicating that bears are stronger. At the same time, the RSI is in bearish territory below 50. 

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Therefore, bears might try to break below and detach from the 1.3800 key level. However, bearish momentum has faded since the downtrend reached the current support. The price started chopping through the 30-SMA with no clear direction. At the same time, the RSI made a bullish divergence, suggesting weakness in the decline.

The divergence might allow bulls to take charge by breaking above the SMA and retesting the 1.4050 key level. Meanwhile, if bears regain momentum, USD/CAD will continue its downtrend.

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• The USD/CAD outlook reflects caution among traders ahead of Canada’s federal election.

• Sales in Canada decreased by 0.4% in February.

• The dollar held on to last week’s gains as traders awaited developments in the US-China trade war.

The USD/CAD outlook reflects caution among traders ahead of Canada’s general election results. As a result, most have remained on the sidelines, keeping the pair in a tight range. Meanwhile, the dollar was steady as market participants hoped for a trade deal between China and the US. 

Canada’s general election is on Monday. The outcome will determine the country’s future, especially its trade relations with the US. Prime Minister Mark Carney’s ruling party remains in the lead. So far, his government has been willing to do all that it takes to ensure the stability of Canada’s economy. An unexpected win could briefly weaken the loonie. 

Meanwhile, data released last week showed that sales in Canada decreased by 0.4% in February. However, this was an improvement from the previous month when sales fell by 0.6%. Moreover, analysts predict a 0.7% rebound in March. 

On the other hand, the dollar held on to last week’s gains as traders awaited developments in the US-China trade war. The two countries adopted a softer stance on tariffs last week, boosting risk appetite. If tariffs come down, the likelihood of a trade deal will increase. At the same time, the outlook for both economies might brighten. 

USD/CAD key events today

USD/CAD technical outlook: Bulls take the lead but remain hesitant

On the technical side, the USD/CAD price has pushed above the 30-SMA, indicating bulls have taken the lead. At the same time, the RSI trades above 50, suggesting stronger bullish momentum. However, volatility remains low and trading is thin, showing indecision. 

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Although bulls have taken charge, they are not willing to bet big and make significant swings above the SMA. The previous decline slowed and paused when the price reached a key support zone comprising the 1.618 Fib extension level and the 1.3800 support level. 

Here, bearish momentum faded, and the RSI made a bullish divergence. At the same time, the price began to stick close to the SMA until it broke above. If volatility increases, the price is likely to retest the 1.4050 resistance level. A break above this level would confirm a new uptrend.

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• The USD/CAD outlook shows relief for the loonie after a BoC pause.

• Market participants are pricing a 50% chance of a BoC rate cut in June.

• The greenback paused its decline after US retail sales rose by 1.4%.

The USD/CAD outlook shows relief for the Canadian dollar after the Bank of Canada paused after seven rate cuts. Meanwhile, the US dollar recovered after retail sales data revealed solid demand. However, tariff uncertainty kept a lid on gains. 

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The Bank of Canada kept interest rates unchanged on Wednesday, pausing an aggressive policy easing cycle. The central bank has been among the most aggressive in lowering borrowing costs. Canada’s economy is quite sensitive to high interest rates. As a result, it was among the first to start deteriorating, pushing the BoC to ease monetary policy. 

Therefore, the pause is a sign that the economy has stabilized. Nevertheless, market participants are pricing a 50% chance that the central bank will cut rates again in June. Moreover, data on Tuesday revealed a sharp inflation decline that might motivate policymakers to continue the easing campaign. Still, they noted that Trump’s tariffs had made it difficult to forecast growth and inflation.

Elsewhere, the greenback paused its decline after US retail sales rose by 1.4%, above estimates. The upbeat figures indicated robust consumer spending and demand. Therefore, it eased pressure on the Fed to lower borrowing costs. Powell said the central bank was in no hurry to cut interest rates.

USD/CAD key events today

USD/CAD technical outlook: Consolidating below 30-SMA

On the technical side, the USD/CAD price remains in a tight consolidation between the 30-SMA and the 1.618 Fib extension level. Still, the bias is bearish since the price trades below the SMA with the RSI under 50. 

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Bears recently made a sharp move, breaking below the 1.4050 support to make a lower low. However, the decline paused when the price met a solid support zone comprising the 1.618 Fib extension and the 1.3800 support level. While the price paused here, the RSI made a bullish divergence, indicating weaker bearish momentum.

The price will soon break above the 30-SMA if the divergence plays out, allowing USD/CAD to retest the 1.4050 resistance level. Meanwhile, if bears regain momentum, the price will break below the support zone to make fresh lows.

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• The USD/CAD price analysis shows a drop in volatility after recent global trade developments.

• The risk of a recession might push the Fed to cut interest rates.

• Canada will release crucial inflation figures today.

The USD/CAD price analysis shows a drop in volatility as calm returns to markets after recent global trade developments. The dollar paused its decline after Trump exempted some imports from the recent tariffs. Meanwhile, the Canadian dollar held near recent peaks as market participants awaited crucial inflation figures from Canada. 

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The turmoil and volatility that affected most global markets eased further on Tuesday. Traders have paused to reflect on the implications of Trump’s tariffs. Policymakers on Monday noted that the risk of a recession might push the Fed to cut interest rates despite high inflation. 

The dollar paused its recent collapse after Trump exempted smartphones and computers from import tariffs. The move brought some relief to US assets. However, the ongoing trade war between China and the US will keep risk appetite low. 

Meanwhile, traders look forward to US retail sales data for more clues on future Fed moves. On the other hand, Canada will release crucial inflation figures today. Economists expect the monthly inflation figure to ease from 1.1% to 0.7%. An upbeat report will lower expectations for Bank of Canada rate cuts. This would support bets for a pause this week. Meanwhile, a soft report might increase rate-cut bets, hurting the loonie.

USD/CAD key events today

• Canada CPI m/m
• Canada median CPI y/y
• Canada trimmed CPI y/y

USD/CAD technical price analysis: Bears pause for breather at the 1.618 Fib extension

On the technical side, the USD/CAD price has remained in consolidation near a solid support zone. However, it trades far below the 30-SMA, showing bears are in the lead. At the same time, the RSI trades near the oversold region, indicating solid bearish momentum. 

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Bears have met a solid support zone comprising the 1.618 Fib extension and 1.3802 support level. After a steep decline, the price has paused as the SMA catches up. However, while the price has started moving sideways, the RSI is climbing, showing bears are losing steam. 

Therefore, USD/CAD might soon pull back to retest the 30-SMA. However, the downtrend will continue if the SMA holds firm and the price bounces lower. A break below the 1.3802 will strengthen the bearish bias.

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• The USD/CAD forecast shows the loonie trading near a five-month high.
• Last week, the Canadian dollar gained over 2.4%.
• Market participants are pricing a 60% chance of a BoC pause.

The USD/CAD forecast shows the loonie trading near a five-month high as traders anticipate a Bank of Canada pause. At the same time, a weak dollar supported the CAD. The greenback collapsed last week amid downbeat US inflation data. At the same time, investors lost confidence in the US administration, leading to a sell-off in US assets. 

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Last week, the Canadian dollar gained over 2.4% as a drop in the dollar allowed most of its peers to rally. The dollar collapsed after Trump imposed and then paused reciprocal tariffs on many countries. The move caused a lot of uncertainty regarding Trump’s policy plans. As a result, investors lost confidence in the US administration. This caused a steep sell-off in US assets as market participants preferred safer options like gold. 

At the same time, the trade war between the US and China escalated, increasing US recession fears. Further downward pressure came from downbeat US inflation data. Consumer inflation dropped by 0.1% compared to expectations for a 0.1% increase. Meanwhile, wholesale inflation fell by 0.4% compared to estimates of a 0.2% increase. The downbeat figures increased expectations for Fed rate cuts. 

On the other hand, market participants were pricing a 60% chance that the Bank of Canada would pause on Wednesday. Such an outcome would pause an aggressive easing cycle, boosting the CAD.

USD/CAD key events today

Market participants do not expect any key events today. Therefore, the pair might extend last week’s move. 

USD/CAD technical forecast: Downtrend could pause at support zone

On the technical side, the USD/CAD price is entering a solid support zone. The zone comprises the 1.618 Fib extension and the 1.3802 key psychological level. The price reached this level after a steep collapse. The bearish bias is strong because the price trades well below the 30-SMA, with the RSI in the oversold region. 

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Bears made a milestone move when the price broke below the 1.4050 support level. It confirmed a continuation of the downtrend. However, after such a sharp decline, bears might pause at the current support zone. 

A pause would allow the price to retest the 30-SMA or the 1.4050 resistance level. Nevertheless, since the bearish bias is strong, the downtrend will likely continue with a break below the 1.3802 support level.

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• The USD/CAD forecast shows a brighter outlook for the global economy.

• Trump temporarily lowered reciprocal tariffs on most countries.

• Market participants are also looking forward to the US consumer inflation report.

The USD/CAD forecast shows a brighter outlook for the global economy after Trump paused some reciprocal tariffs. At the same time, Canada and Japan have agreed to cooperate with the Trump administration to maintain calm in the financial markets. As a result, the loonie rebounded sharply. However, the trade war between the US and China rages on, keeping a lid on risk appetite.

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Trump turned around late on Wednesday to temporarily lower reciprocal tariffs on most countries, boosting the Canadian dollar. At the same time, the dollar rebounded against safe-haven currencies. The sudden shift showed that the tariffs were mostly a negotiating tactic. However, the trade war between the US and China continues, clouding the outlook for both economies. 

Moreover, Canada and Japan are among the countries that have decided to work with Trump to maintain peace and calm. This has eased concerns about Canada’s economy. At the same time, it has eased pressure on the Bank of Canada to lower borrowing costs in response to tariffs.

Market participants are also looking forward to the US consumer inflation report. An upbeat report will lower Fed rate cut expectations. On the other hand, a downbeat report might convince policymakers to cut rates faster. However, they might wait to see the impact of Trump’s tariffs on the economy.

USD/CAD key events today

• US core CPI m/m
• US CPI m/m
• US CPI y/y
• US unemployment claims

USD/CAD technical forecast: Bears aim for a new low below 1.4050

On the technical side, the USD/CAD price has dropped to retest the 1.4050 support level. The price trades well below the 30-SMA with the RSI near the oversold region, suggesting a strong bearish bias. However, bears are facing a solid hurdle at the 1.4050 support. 

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Previously, when the price fell to this support, it reversed sharply to the 30-SMA. Although it broke above the resistance, bulls failed to sustain a move higher, allowing bears to resume the downtrend. However, if the 1.4050 support holds firm, bulls might return. Such an outcome could mean a consolidation between the 1.4050 support and the 1.4250 resistance. On the other hand, a break below 1.4050 will strengthen the bearish bias with a lower low.

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• The USD/CAD price analysis shows increasing hopes of tariff negotiations.

• Canada was among the few countries that escaped reciprocal tariffs.

• The Eurozone and China are ready to impose counter-tariffs.

The USD/CAD price analysis shows a rebound in the Canadian dollar amid hopes of tariff negotiations that might lift global economic concerns. Meanwhile, the dollar remained fragile due to a recent drop in Treasury yields due to recession worries. 

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Canada was among the few countries that escaped reciprocal tariffs on Wednesday. As a result, the Canadian dollar performed better than most other currencies. Moreover, market participants were expecting Trump to implement a 25% tariff on all imports from Canada. Such an outcome would have significantly hurt the loonie. As a result, there was relief when it did not come. Nevertheless, Canada still has to struggle with tariffs on steel, aluminum, and automobiles. 

On the other hand, the dollar has fallen amid a drop in Treasury yields. The new tariffs announced last week have escalated trade tensions. The Eurozone and China are among the major economies that are ready to impose counter-tariffs. These tensions have sent traders scrambling for safer currencies like the yen. Meanwhile, US recession fears intensified, increasing Fed rate cut expectations and putting pressure on the dollar. 

However, there was some relief on Tuesday amid reports that most countries are willing to negotiate better trading deals.

USD/CAD key events today

Market participants do not expect any high-impact economic releases from Canada or the US. As a result, the price might remain in a tight range.

USD/CAD technical price analysis: Bears pause at the 1.4150 support

On the technical side, the USD/CAD price has paused after meeting the 1.4150 support level. However, the bias is bearish since the price trades below the 30-SMA with the RSI below 50. Bulls have challenged the 30-SMA but failed to break above. 

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The price recently met the 1.4050 support level before bouncing higher to retest the 30-SMA. Here, bulls punctured the resistance but failed to continue higher, making a wick. This allowed bears to return and push the price lower. However, the pause at the 1.4150 support has made a higher low. This is a sign that bulls might still attempt to take control.  

A break above the SMA will confirm a bullish sentiment shift. On the other hand, if the SMA holds firm, the price will break below 1.4150 to retest the 1.4050 support level.

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