The USD remains under pressure against major currencies, despite higher Core PCE estimates and positive Retail Sales data. Market expectations for a Federal Reserve rate easing shifted from over 80 basis points to about 60 basis points, with the FOMC expected to keep rates steady during its upcoming meeting.
The Bank of Canada recently cut interest rates by 25 basis points to 2.75% due to concerns over weaker growth from trade uncertainty and US tariffs. The central bank is taking a cautious stance, balancing inflation and demand, and sees a 57% chance of no change in rates at the next meeting.
Usdcad Range Analysis
The USDCAD currency pair continues to range between 1.42 and 1.45 due to tariff uncertainties. Analysis of the 4-hour chart indicates that sellers are targeting the lower end of the range at 1.4245 following a drop below 1.4365.
For the 1-hour chart, buyers aim to buy the dip near 1.4245, while sellers seek to push prices lower. Upcoming reports include Canadian CPI today, the FOMC Policy Decision tomorrow, US Jobless Claims on Thursday, and Canadian Retail Sales data on Friday.
The pressure on the US dollar persists, even as Core PCE estimates came in higher and Retail Sales figures reflected strength. Market expectations for Federal Reserve policy have adjusted, moving from an assumption of more than 80 basis points of rate reductions to a projection closer to 60 basis points. This reflects a shift in sentiment, with traders positioning themselves for steady rates in the upcoming FOMC meeting rather than a near-term reduction.
When central banks adjust their guidance, especially amid global uncertainty, price movements in currency pairs tend to reflect those changes quickly. The Bank of Canada, having lowered its benchmark rate by 25 basis points to 2.75%, highlighted concerns about slower growth stemming from trade challenges. Policymakers are looking to maintain a balance between inflation control and economic demand. Current pricing in the futures market indicates a 57% probability that rates will remain unchanged in the next meeting, which suggests that investors lack conviction in a near-term rate cut.
Short Term Market Outlook
In the USDCAD pair, the effects of ongoing trade-related concerns are visible in price stability, with the range between 1.42 and 1.45 staying intact. On the 4-hour chart, recent movement suggests sellers are increasing their presence, particularly after breaking through 1.4365. The lower boundary of the range around 1.4245 remains in focus, with sellers attempting to drive price towards that level.
Shorter timeframes show buying activity concentrated near 1.4245, where traders are stepping in to capitalise on dips. Meanwhile, sellers continue to reinforce overhead resistance in an effort to keep downside pressure intact. With Canadian CPI numbers scheduled for release today, followed by the FOMC Policy Decision tomorrow, markets may experience sharper moves. Later in the week, US Jobless Claims on Thursday and Canadian Retail Sales on Friday will add further clarity on labour conditions and consumer demand in both economies. Holding a clear stance on directional bias will be necessary as the data is released, given how technical levels are reacting to fundamental inputs.
