All Eyes on Canada’s Interest Rate Decision | A Crucial Move by BoC

Following yesterday’s unexpected drop in Canadian inflation, market participants are closely watching today’s Bank of Canada (BoC) policy decision. The outcome could have a direct impact on the USD/CAD currency pair in the coming days.

Inflation Falls—Will Rate Cuts Pause?

The latest Consumer Price Index (CPI) data showed that inflation in March was just 0.3 %, well below market expectations of< 0.7 %/strong>. This decline signals easing inflationary pressures in the Canadian economy and could prompt the central bank to take a more cautious approach to monetary policy going forward.

Since the start of the year, the BoC has cut rates from 4.25% to 2.75%, but held steady in March. Given this backdrop, analysts expect rates to remain unchanged today.

USD/CAD Correction Underway—Rebound from Key Support

After retreating to the key support level of 1.38500 yesterday, the USD/CAD pair has since rebounded to 1.39200 now. The RSI indicator has also exited oversold territory, returning to the neutral range, suggesting a temporary resurgence in buying momentum.

If the BoC adopts acautious tone or signals a pause in its easing cycle in today’s statement, there’s potential for further gains in USD/CAD, possibly testing resistance at 1.3990. Conversely, any hints of continued rate cuts or concerns about recession could strengthen the Canadian dollar, putting pressure back on the 1.38 support level.

Key Point for Trendo Traders

While it’s highly likely that the BoC will keep rates unchanged today, what will really move the market is the tone of the statement and the central bank’s assessment of the economic outlook. So, keep a close watch to USD/CAD price action as well as to the release of the BoC’s statement, on the Trendo Trading Platform.