USD/CAD faces Canada CPI ahead of Fed rate decision
USD/CAD Outlook
USD/CAD struggles to retain the advance from the monthly low (1.3555) following the failed attempt to test the 2022 high (1.3978), but the update to Canada’s Consumer Price Index (CPI) may prop up the exchange rate as the report is anticipated to show a further slowdown in inflation.
USD/CAD faces Canada CPI ahead of Fed rate decision
USD/CAD tests last week’s low (1.3652) as the US Dollar weakens against most of its major counterparts, and the Federal Reserve interest rate decision on March 22 may influence the near-term outlook for the exchange rate as the central bank comes under pressure to conclude its hiking-cycle.
Join David Song for the next Live Economic Coverage webinar to cover the Federal Reserve rate decision on Wednesday, March 22. Register Here
Until then, data prints coming out of Canada may sway USD/CAD as the headline reading for inflation is expected to narrow for the fourth consecutive month, with the core CPI expected to print at 4.6% per annum in February which would mark the lowest reading since April 2022.
Evidence of easing price pressures may generate a bearish reaction in the Canadian Dollar as it encourages the Bank of Canada (BoC) to retain a wait-and-see approach for monetary policy, and Governor Tiff Macklem and Co. may stick to the sidelines at the next meeting on April 12 as ‘the latest data remains in line with the Bank’s expectation that CPI inflation will come down to around 3% in the middle of this year.’
With that said, another downtick in Canada’s CPI may keep USD/CAD above the monthly low (1.3555) ahead of the Fed rate decision, but the failed attempt to test the 2022 high (1.3978) may lead to a near-term correction in the exchange rate as the Relative Strength Index (RSI) continues to fall back from overbought territory.
Canadian Dollar Price Chart – USD/CAD Daily
Chart Prepared by David Song, Strategist; USD/CAD Price on TradingView
- USD/CAD appears to be reversing course following the failed attempt to test the 2022 high (1.3978), with the Relative Strength Index (RSI) registering a textbook sell signal last week as it moved below 70.
- Failure to hold above 1.3630 (38.2% Fibonacci retracement) may push USD/CAD towards the monthly low (1.3555), with a move below the 50-Day SMA (1.3504) opening up the 1.3440 (23.6% Fibonacci retracement).
- However, USD/CAD may face range bound conditions after testing last week’s low (1.3652), with a move above the 1.3810 (161.8% Fibonacci extension) region raising the scope for a run at the monthly high (1.3862).
--- Written by David Song, Strategist
Follow me on Twitter at @DavidJSong
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.
Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.
Contracts for Difference (CFDs) are not available to US residents.
FOREX.com is a trading name of GAIN Capital - FOREX.com Canada Limited, 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA is a member of the Canadian Investment Regulatory Organization and Member of the Canadian Investor Protection Fund. GAIN Capital – FOREX.com Canada Limited is a wholly-owned subsidiary of Stonex Group Inc.
Complaints are taken very seriously at FOREX.com. You can view our complaints procedure here.
© FOREX.COM 2025