Fundamental
Overview
The USD appreciated a
little the day after the FOMC decision although it seemed more like a technical
pullback as the central bank didn’t offer anything new. In fact, the Fed just
delivered on expectations keeping rates steady, reducing the QT pace, revising
growth lower and inflation higher, and keeping the dot plot mostly unchanged.
Fed Chair Powell just
acknowledged the current uncertainty around Trump’s policies and the inflation
outlook but confirmed that the economy remains healthy, and the Fed is in a
good position to wait for more clarity. The market is pricing around 69 bps of
easing by year-end.
On the CAD side, the BoC
cut interest rates by 25 basis points to 2.75% as expected recently 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 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 67% chance of no change at the upcoming
meeting and a total of 49 bps of easing by year-end.
USDCAD
Technical Analysis – Daily Timeframe
USDCAD Daily
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
USDCAD 4 hour
On the 4 hour chart, we can
see that as the price last week probed above the key 1.4365 level but
eventually failed to sustain the momentum as the sellers piled in for a drop
back into the 1.4245 support. The buyers will want to see the price
breaking above the 1.4365 level again to start targeting the 1.4500 resistance
next.
USDCAD Technical
Analysis – 1 hour Timeframe
USDCAD 1 hour
On the 1 hour chart, there’s
not much else we can add here as the buyers will look for a break above the
1.4365 level, while the sellers will continue to pile in around the level to keep targeting the support. The red lines define the average daily range for today.
Upcoming Catalysts
Today we get the US Flash PMIs. Tomorrow,
we have the US Consumer Confidence report. On Thursday, we get the latest US
Jobless Claims figures. On Friday, we conclude the week with the Canada GDP and
the US PCE report.
