The USDCAD pair remains within a range amid trade uncertainty before the US tariffs plan announcement on April 2. The USD saw slight appreciation following the recent FOMC decision, where the Federal Reserve maintained interest rates and adjusted its economic outlook.
The Bank of Canada lowered interest rates to 2.75% amidst concerns of slower growth linked to trade uncertainties. The market indicates a 67% probability of no change in rates at the next meeting, with an expected easing of 49 basis points by year-end.
Technical Analysis Overview
Technical analysis shows USDCAD fluctuating between 1.42 and 1.45. On the 4-hour chart, a recent attempt to rise above 1.4365 did not sustain, resulting in a drop to 1.4245.
Key upcoming economic reports include the US Flash PMIs, Consumer Confidence, Jobless Claims, Canada GDP, and US PCE report.
This range-bound movement reflects a broader hesitation, shaped by both trade concerns and shifts in monetary policy. Powell’s remarks after the latest Federal Reserve meeting provided a measured stance, reinforcing a data-dependent approach while signalling no urgency to adjust rates. The dollar gained modestly in the aftermath, though its trajectory remains sensitive to incoming data.
At the same time, Macklem’s decision to cut rates to 2.75% underscores growing unease about domestic economic momentum. With inflation showing signs of moderation and trade disruptions dampening business sentiment, policymakers opted for action rather than delay. Yet, despite this step, markets are not fully convinced of an aggressive easing cycle. Current pricing suggests a greater likelihood of stability in the near term, while futures imply nearly two additional cuts before the year concludes.
Short Term Market Outlook
A closer look at price action indicates that attempts to surpass 1.4365 faced resistance, bringing prices back towards 1.4245. This range remains intact, leaving traders attentive to potential breakouts or continued consolidation. The way price movements unfold in the short term may depend heavily on upcoming data releases as well as broader risk sentiment.
With the US Flash PMI figures set for release, traders will gain insight into whether economic momentum remains intact. Consumer confidence data follows closely behind, offering another perspective on household sentiment. Meanwhile, jobless claims continue to be monitored for any sign of deterioration in the labour market.
North of the border, Canada’s GDP data is likely to influence rate expectations, particularly in light of recent policy adjustments. Should growth figures come in below expectations, speculation around further easing could intensify. Conversely, an upside surprise might prompt a reassessment of current market probabilities.
Finally, the US PCE report will provide an update on inflationary trends, an area of focus for policymakers balancing economic strength with price stability. Any deviation from forecasts could shift expectations around future rate decisions, adding another layer of volatility to the currency pair’s movements.
