FundamentalOverview

The USD continues to remainunder pressure against most major currencies despite higher Core PCE estimatesfollowing the US CPI and PPI reports, and a better-than-expected RetailSales data yesterday.

The market pricing for theFed went from expecting more than 80 bps of easing by year-end at the peak ofthe risk-off sentiment to roughly 60 bps as of now. That didn’t provide apullback in the US Dollar selloff though. The focus now switched to the FOMCdecision 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% asexpected last week amid concerns over weaker growth ahead due to the tradeuncertainty and US tariffs. The central bank emphasized a cautious approach tofuture decisions, balancing the upward pressure on inflation against thedownward pressure on weaker demand.

Governor Macklem acknowledged the economic uncertainty, and he warnedthat a prolonged trade war could slow GDP growth, weaken the job market, andpush inflation higher, creating a difficult policy environment. The market seesa 57% chance of no change at the upcoming meeting and a total of 47 bps ofeasing by year-end.

USDCADTechnical Analysis – Daily Timeframe

On the daily chart, we cansee that USDCAD continues to mostly range between the 1.42 and 1.45 levels asthe uncertainty around tariffs remains high. There’s not much we can glean fromthis timeframe, so we need to zoom in to see some more details.

USDCAD TechnicalAnalysis – 4 hour Timeframe

On the 4 hour chart, we cansee that as the price fell below the key 1.4365 level yesterday, the sellerspiled in with more conviction to target the bottom of the recent range aroundthe 1.4245 level. The buyers will likely step in around the 1.4245 level with adefined risk below it to position for a pullback into the downward trendline.

USDCAD TechnicalAnalysis – 1 hour Timeframe

On the 1 hour chart, there’snot much else we can add here as the buyers will look to buy the dip around the1.4245 level, while the seller will target a break below the level to extendthe 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 JoblessClaims figures. On Friday, we have the Canadian Retail Sales data.