USD/CAD Price Forecast: Pair Slips Toward 1.35 as BoC Decision Takes Center Stage
USD/CAD slides toward 1.35 as BoC rate decision, Fed cut bets, and rising oil prices reshape the outlook for the Canadian dollar...
Quick overview
- USD/CAD is declining towards 1.35 as traders anticipate the Bank of Canada's rate decision amidst mixed economic signals.
- The US dollar is under pressure due to expectations of future Federal Reserve rate cuts, influenced by softer economic data.
- Rising crude oil prices are providing support to the Canadian dollar, benefiting Canada's economy as a major energy exporter.
- Technically, USD/CAD has turned bearish, breaking key support levels and indicating a potential further decline.
USD/CAD slides toward 1.35 as BoC rate decision, Fed cut bets, and rising oil prices reshape the outlook for the Canadian dollar. It’s a pivotal day for the Canadian dollar. During the European session, USD/CAD extended its decline toward $1.3575, with traders positioning ahead of the Bank of Canada’s monetary policy decision. While markets broadly expect the BoC to hold rates steady, the tone of its statement and press conference may matter more than the decision itself.
Canada’s economy has shown mixed signals, with inflation easing but growth still uneven. As a result, traders are weighing whether the BoC signals patience or opens the door to future easing. Any hint of a prolonged pause could stabilize the loonie, while cautious language may increase volatility across CAD pairs.
Fed Rate-Cut Bets Weigh on the US Dollar
At the same time, the US dollar remains under pressure as investors look ahead to the Federal Reserve’s policy decision. Markets are increasingly pricing in two additional Fed rate cuts later this year, driven by softer economic data and renewed political pressure on the central bank.
Comments from President Donald Trump regarding Federal Reserve leadership have reinforced expectations for a more accommodative policy path. Even though rates are expected to remain unchanged for now, guidance around future cuts has kept the dollar defensive, amplifying downside pressure in USD/CAD.
Oil Strength Adds Support to the Loonie
Rising crude oil prices are also playing a role. As a major energy exporter, Canada typically benefits from higher oil prices, which support government revenues and improve trade dynamics. The recent climb in oil has helped cap any USD/CAD rebounds, keeping sellers in control ahead of the BoC announcement.
USD/CAD Technical Outlook: $1.35 Comes Into View
From a technical perspective, USD/CAD has turned decisively bearish. The pair has broken below a long-term descending trendline and lost both the 50-day and 100-day moving averages, confirming a broader shift in structure. Price is now trading near $1.3560, following a sharp rejection from the $1.3870–$1.3900 resistance zone.
Momentum accelerated as the pair sliced through the 38.2% and 50% Fibonacci retracements, signaling firm bearish control rather than a shallow pullback. The RSI has dropped into oversold territory near the mid-20s, reflecting strong downside momentum, even if short-term bounces emerge.
- Key support: $1.3550–$1.3520
- Next downside level: $1.3470 on a daily close below support
- Resistance on rebounds: $1.3750–$1.3820
Unless USD/CAD reclaims former support, the technical bias remains tilted lower as policy risk dominates the session.
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