The Canadian Dollar is holding steady at the key 1.3700 level, despite recent data showing softer inflation in Canada, suggesting that the Bank of Canada (BoC) may take a more dovish approach. Investors are closely watching BoC Governor Tiff Macklem’s scheduled speech today, which could provide further insight into the central bank‘s future interest rate decisions. Analysts are looking for a total of around 80 basis points of potential rate cuts between now and December 2024, with the easing expected to begin between April and June.
The latest Federal Reserve minutes did not reveal any major new developments, but highlighted a slowing U.S. economy. Upcoming reports on durable goods orders and consumer sentiment are expected to put further pressure on the Dollar. These economic indicators will be closely watched as they could influence the direction of the Federal Reserve’s monetary policy.
Market participants are also looking ahead to this weekend’s OPEC+ meeting, where decisions on whether to extend production cuts will be crucial for the Canadian Dollar’s direction. As Canada is a major oil exporter, the outcome of the OPEC+ meeting could have a significant impact on the currency.
The technical analysis shows that the USD/CAD is testing important channel support levels. Failure to hold these levels could lead to increased strength in the Canadian Dollar. Resistance levels are at 1.3899 and 1.3800, while support is at the psychological level of 1.3700 and near the significant 50-day moving average, which is currently at 1.3668. The Relative Strength Index (RSI) indicates that the market is indecisive as traders await important economic news that could affect the currency’s movement.
