CAD - USD/CAD in bottoming phase

Traders are now pricing in an 80 basis point rate cut this year, starting in July, after the release last week of stronger-than-expected U.S. job growth in April. U.S. President Donald Trump said he will not remove Federal Reserve Chairman Jerome Powell from his post before his term ends in May 2026, while describing the central bank chief as "a rigid person" and reiterating his call for the Fed to lower interest rates. This week will see the interest rate decisions of the United States and the United Kingdom; the market generally expects the Federal Reserve to keep interest rates unchanged at 4.25%-4.50% on Wednesday. Given the uncertainty of the impact of U.S. tariffs on the economy, the market predicts that there is more than a 90% chance that the Fed will remain on hold. The Fed's statement and press conference after the meeting are expected to be the focus of the market; on the other hand, the Bank of England is expected to further cut interest rates by 25 basis points to 4.25% on Thursday. In addition, negotiations between the United States and its major trading partners remain in focus, while there is hope that Sino-US trade tensions will cool down.

The USD/CAD exchange rate has been consolidating in a rather narrow range at a low level recently, with the 1.38 level being an important bottom during this period. As can be seen from the technical chart, the RSI and stochastic index are recovering from the oversold area, and the 5-day moving average is also tending to break through the 10-day moving average. It is expected that the USD/CAD exchange rate is tending to bottom out and rebound. The support level will continue to pay attention to the 1.38 level. The exchange rate has remained above this area for more than a week. If there is a break in the subsequent market, the extended target will be the 100-week moving average of 1.3730 and 1.35. The next level will refer to the low of 1.3418 in September last year. As for the upward resistance level, we will firstly look at 1.40 and the 25-day moving average of 1.4040. The next level is expected to be 1.4250 and 1.44.

Forecast range:
Resistance 1.4000 – 1.4040 – 1.4250 – 1.4400
Support 1.3800* – 1.3740 – 1.3500 – 1.3418

Focus:
Tuesday: Canada's international trade balance in March (20:30)

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