USD/CAD Price in Focus Ahead of Bank of Canada Decision

All Eyes on the Bank of Canada

Markets are closely watching the Bank of Canada meeting scheduled for tomorrow, where a decision on interest rates will be announced. At its previous meeting, the BoC cut rates by 25 basis points and hinted it may pause further cuts, citing stronger-than-expected economic growth in the first quarter.

With inflation hovering around 3% and no current threat of new tariffs on Canadian goods from the Trump administration, investors expect the BoC to hold interest rates steady at 2.75%. Governor Tiff Macklem has emphasized that interest rates will be set in response to economic risks, reinforcing expectations for a pause.

Investors will pay close attention to the Governor’s press conference following the rate announcement, seeking clarity on future monetary policy. Any hint toward further easing—especially the potential return of quantitative easing to counter economic impacts from possible tariffs—could put downward pressure on the Canadian dollar.

U.S. Administration Seeks to Limit Tariff Damage

Meanwhile, the U.S. administration is attempting to soften the blow of tariffs imposed on foreign goods, which have raised concerns about a potential recession. President Trump has delayed tariffs on select countries for 90 days—excluding China—and opened the door to possible trade negotiations. Tariffs on certain Chinese electronics have also been suspended temporarily to allow U.S. companies time to adjust their supply chains and production strategies.

While the U.S. dollar is typically viewed as a safe haven in uncertain times, the market has recently preferred the Japanese yen and Swiss franc. The administration may be looking to weaken the US dollar to shift investor focus back to equities from bonds to bolster economic performance, especially given potential disruptions to supply chains from both tariffs and potential retaliatory measures.

USD/CAD Hits Multi-Month Lows

In early April, the USD/CAD pair closed below its 50-day moving average and initiated a downtrend, forming a lower high with a lower low. This movement has driven the pair to its lowest level since early November. Currently, USD/CAD is trading between 1.3851 and 1.4151.

A daily close below the 1.3851 would signal strong bearish momentum and could drive the pair toward 1.3589. However, traders should also watch for a potential rebound around the support level at 1.3661.

Key Resistance Levels to Monitor

On the other hand, sustained trading above the low end of the current range would suggest weakening bearish momentum, potentially leading to a correction toward the high end of the zone at 1.4151. A daily close above this level could trigger a rally toward 1.4332. In that scenario, a potential reversal near the 50-day moving average resistance should also be considered.

USDCAD price – Daily Chart

Chart Source: ADSS Platform