The Canadian Dollar (CAD) showed strength following the Bank of Canada's (BoC) 25 basis point rate cut, pushing USDCAD lower to the 1.4400 region. However, CAD's upside may be limited as the broader market remains cautious. Short-term technical patterns suggest USDCAD could see a further downside if it remains below key resistance at 1.4425/50. However, any weakness in CAD could be seen as a retracement toward the 1.4500 level.
Fundamental Factors Affecting CAD
- The BoC's decision to cut rates to 2.75% was widely expected, marking the seventh consecutive reduction.
- Trade tensions with the US remain a key risk, with the threat of tariffs affecting sentiment and growth.
- Inflation is projected to rise to 2.5% in March, driven in part by the expiration of a sales tax break.
- Business spending and consumer confidence have weakened, adding to downside risks.
- The BoC emphasized its cautious approach, balancing inflation concerns with economic uncertainty.
Market Reaction & Outlook
Following the BoC's decision, the CAD strengthened against major currencies, particularly the Japanese Yen. However, further gains may be limited unless trade tensions ease or economic data surprises to the upside.
Key Takeaway for Traders
While the rate cut was expected, ongoing trade concerns and inflation pressures created uncertainty for CAD. Traders should watch upcoming inflation data and BoC commentary for signals on future policy moves.
CADCHF – D1 Timeframe
.png)
The exchange rate has been steadily dropping in the daily timeframe of CADCHF, with minor retracements occasionally. Currently, the price is prepping another retracement aimed at retesting the immediate supply zone.
CADCHF – H4 Timeframe
.png)
The 4-hour timeframe chart of CADCHF shows that the supply zone falls perfectly between the 76% and 88% Fibonacci retracement levels. The presence of an FVG (Fair Value Gap) and inducement contribute to the bearish leaning of the market sentiment.
Analyst's Expectations:
Direction: Bearish
Target- 0.60510
Invalidation- 0.62311
CONCLUSION
You can access more trade ideas and prompt market updates on the telegram channel.
