FundamentalOverview

The USD appreciated alittle the day after the FOMC decision although it seemed more like a technicalpullback as the central bank didn’t offer anything new. In fact, the Fed justdelivered on expectations keeping rates steady, reducing the QT pace, revisinggrowth lower and inflation higher, and keeping the dot plot mostly unchanged.

Fed Chair Powell justacknowledged the current uncertainty around Trump’s policies and the inflationoutlook but confirmed that the economy remains healthy, and the Fed is in agood position to wait for more clarity. The market is pricing around 69 bps ofeasing by year-end.

On the CAD side, the BoCcut interest rates by 25 basis points to 2.75% as expected recently amidconcerns over weaker growth ahead due to the trade uncertainty and US tariffs. Thecentral bank emphasized a cautious approach to future decisions, balancing theupward pressure on inflation against the downward pressure on weaker demand.

Governor Macklem acknowledgedthe economic uncertainty and warned that a prolonged trade war could slow GDPgrowth, weaken the job market, and push inflation higher, creating a difficultpolicy environment. The market sees a 67% chance of no change at the upcomingmeeting and a total of 49 bps of easing 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 last week probed above the key 1.4365 level buteventually failed to sustain the momentum as the sellers piled in for a dropback into the 1.4245 support. The buyers will want to see the pricebreaking above the 1.4365 level again to start targeting the 1.4500 resistancenext.

USDCAD TechnicalAnalysis – 1 hour Timeframe

On the 1 hour chart, there’snot much else we can add here as the buyers will look for a break above the1.4365 level, while the sellers will continue to pile in around the level to keep targeting the support. The red lines define the average daily range for today.

Upcoming Catalysts

Today we get the US Flash PMIs. Tomorrow,we have the US Consumer Confidence report. On Thursday, we get the latest USJobless Claims figures. On Friday, we conclude the week with the Canada GDP andthe US PCE report.