USD/CAD was bearish from the time the coronavirus pandemic started until summer last year, when inflation moved above 5% in the US and the FED started to turn the rhetoric hawkish. That turned the USD bullish and this forex pair increased from 1.20 where it formed support to below 1.30.

Since then, the price has been bouncing up and down in a range on the daily chart. Right now the price is at the bottom of the range so a reversal higher might come soon. The USD has been retreating against all major currencies this week which seems to be over now. besides that, the FED is turning even more hawkish as prices keep surging, but so is the Bank of Canada.

USD/CAD Daily Chart – Can the Support Hold?

A reversal here would offer 500 pips to buyers until the top of the range 

The economy of Canada posted a 0.2% expansion for January, while February is expected at 0.8% as the initial reading showed, although the March reading will be more important, since it will show the picture after the price jump last month.

Canada January GDP

• Canada January GDP has risen for 8 straight months
• Good producing sector +0.8%
• Services sector 0.0%
• 9 of 20 industries increased
• Advance February GDP reading +0.8%

Residential construction and wholesale trade were two big drivers of the gain, along with utilities due to cold weather. Surprisingly, retail trade rose 2.5% in January despite lockdowns. That mostly offsets the 2.8% decline in December.

The big news here is the +0.8% preliminary reading for February, which should push Canada above pre-pandemic GDP. Canada fully reopened in March, so there will be some large tailwinds for a few months, particularly in services.

USD/CAD Live Chart