USDCAD Technical Analysis – Trade uncertainty remains the main driver

Fundamental Overview

The US CPI yesterday missed expectations across the board but the details that feed into the Core PCE were less encouraging with early estimates increasing. The price action in the USD has been mixed following the data release as the markets are likely waiting for the US PPI today to get better estimates for the PCE.

On the CAD side, the BoC cut interest rates by 25 basis points to 2.75% as expected 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 Tiff Macklem acknowledged the economic uncertainty, and he 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 97% chance of another 25 bps cut at the upcoming meeting and a total of 53 bps of easing by year-end.

USDCAD Technical Analysis – Daily Timeframe

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

On the 4 hour chart, we can see that the price dropped back to the key 1.4365 level which has been acting as kind of a barometer for the sentiment. This is where we can expect the buyers to step in with a defined risk below the level to position for a rally into new highs. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 1.4245 level next.

USDCAD Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we have a minor downward trendline defining the bearish momentum on this timeframe. The sellers will likely lean on the trendline to keep pushing into the 1.4245 level, while the buyers will look for a break higher to increase the bullish bets into new highs. The red lines define the average daily range for today.

Upcoming Catalysts

Today we get the US PPI data and the US Jobless Claims figures. Tomorrow, we conclude the week with the University of Michigan Consumer Sentiment report.