USDCAD Technical Analysis – Stuck in a tariffs limbo

Fundamental Overview

The USD continues to remain under pressure against most major currencies despite higher Core PCE estimates following the US CPI and PPI reports, and a better-than-expected Retail Sales data yesterday.

The market pricing for the Fed went from expecting more than 80 bps of easing by year-end at the peak of the risk-off sentiment to roughly 60 bps as of now. That didn’t provide a pullback in the US Dollar selloff though. The focus now switched to the FOMC decision due tomorrow where the Fed is expected to keep rates steady.

On the CAD side, the BoC cut interest rates by 25 basis points to 2.75% as expected last week 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 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 57% chance of no change at the upcoming meeting and a total of 47 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 as the price fell below the key 1.4365 level yesterday, the sellers piled in with more conviction to target the bottom of the recent range around the 1.4245 level. The buyers will likely step in around the 1.4245 level with a defined risk below it to position for a pullback into the downward trendline.

USDCAD Technical Analysis – 1 hour Timeframe

On the 1 hour chart, there’s not much else we can add here as the buyers will look to buy the dip around the 1.4245 level, while the seller will target a break below the level to extend the drop into new lows. The red lines define the average daily range for today.

Upcoming Catalysts

Today we get the Canadian CPI report. Tomorrow, we have the FOMC Policy Decision. On Thursday, we get the latest US Jobless Claims figures. On Friday, we have the Canadian Retail Sales data.