The USDCAD pair is nearing a crucial swing level ahead of the Bank of Canada (BoC) and Federal Open Market Committee (FOMC) rate decisions. The US dollar regained ground last week without any major catalyst and continues to range as the market waits for a new trend. The Federal Reserve is expected to maintain interest rates, with discussions of a possible cut in September.<\/p>\n
In Canada, inflation remains near the upper bound of the target range, improving recent data. The employment report surprised positively. The BoC is expected to keep rates unchanged, with a 50\/50 chance of no further rate cuts this year. In technical analysis, USDCAD trades within a range between 1.3550 support and 1.3800 resistance on the daily chart.<\/p>\n
On the 4-hour chart, breaking above resistance could extend the rally to 1.3860. The 1-hour chart features a minor upward trendline, indicating bullish momentum, with buyers aiming for new highs and sellers hoping for a reversal. Upcoming economic events include the US ADP, US GDP, BoC rate decision, FOMC policy announcement, and additional US and Canadian economic data through the week.<\/p>\n
The USDCAD pair is hovering near the top of its established range as we await decisions from both the Bank of Canada and the Federal Reserve today. Traders have been confined between the 1.3550 support and the 1.3800 resistance for months, a pattern we’ve seen in other markets. The flood of economic data this week, including GDP and jobs reports, is expected to finally force a decisive move.<\/p>\n
With the “short US dollar” position being the most crowded trade, the market is vulnerable to a sharp upward correction in the greenback. The latest US CPI data from earlier this month came in at 3.2%, reminding us that inflation remains persistent and complicating the Federal Reserve’s path. This supports the view that the Fed will hold rates steady today but keep the door open for a September cut, making Chair Powell’s tone crucial.<\/p>\n
On the Canadian side, underlying inflation has remained stubbornly high, with the last reading holding near the BoC’s 2.9% upper limit. This, combined with the surprisingly strong employment report we saw for June, gives the Bank of Canada reason to maintain a hawkish stance. As a result, overnight index swaps are now pricing in less than one full interest rate cut for the rest of 2025.<\/p>\n
Given the major event risk, implied volatility on USDCAD options has likely increased, similar to the spikes we saw around central bank meetings in late 2024. Traders could consider strategies like long straddles or strangles, which profit from a large price move in either direction without needing to predict the outcome. This allows you to capitalize on the breakout from the 1.3550-1.3800 range when it finally happens.<\/p>\n
For those with a directional view, buying out-of-the-money call options on USDCAD could be a cost-effective way to bet on a hawkish Fed surprise or weak US data later this week. Conversely, put options would benefit from a surprisingly resolute Bank of Canada that pushes the pair back towards the 1.3550 support. Using options defines your maximum risk, which is essential given the flurry of catalysts.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" USDCAD nears key level as markets await BoC, FOMC decisions; bullish momentum builds amid uncertainty.<\/p>\n","protected":false},"author":62,"featured_media":16960,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-27661","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/27661","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=27661"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/27661\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/16960"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=27661"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=27661"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=27661"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}