USD/CAD Outlook: Loonie Relieved as BoC Hits Pause…

• The USD/CAD outlook exhibits reduction for the loonie after a BoC pause.

• Market individuals are pricing a 50% likelihood of a BoC price minimize in June.

• The dollar paused its decline after US retail gross sales rose by 1.Four%.

The USD/CAD outlook exhibits reduction for the Canadian greenback after the Financial institution of Canada paused after seven price cuts. In the meantime, the US greenback recovered after retail gross sales information revealed stable demand. Nevertheless, tariff uncertainty saved a lid on positive factors. 

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The Financial institution of Canada saved rates of interest unchanged on Wednesday, pausing an aggressive coverage easing cycle. The central financial institution has been among the many most aggressive in decreasing borrowing prices. Canada’s financial system is sort of delicate to excessive rates of interest. In consequence, it was among the many first to start out deteriorating, pushing the BoC to ease financial coverage. 

Subsequently, the pause is an indication that the financial system has stabilized. However, market individuals are pricing a 50% likelihood that the central financial institution will minimize charges once more in June. Furthermore, information on Tuesday revealed a pointy inflation decline which may encourage policymakers to proceed the easing marketing campaign. Nonetheless, they famous that Trump’s tariffs had made it troublesome to forecast progress and inflation.

Elsewhere, the dollar paused its decline after US retail gross sales rose by 1.Four%, above estimates. The upbeat figures indicated sturdy client spending and demand. Subsequently, it eased strain on the Fed to decrease borrowing prices. Powell mentioned the central financial institution was in no hurry to chop rates of interest.

USD/CAD key occasions right this moment

USD/CAD technical outlook: Consolidating under 30-SMA

On the technical facet, the USD/CAD value stays in a good consolidation between the 30-SMA and the 1.618 Fib extension stage. Nonetheless, the bias is bearish because the value trades under the SMA with the RSI below 50. 

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Bears just lately made a pointy transfer, breaking under the 1.4050 help to make a decrease low. Nevertheless, the decline paused when the value met a stable help zone comprising the 1.618 Fib extension and the 1.3800 help stage. Whereas the value paused right here, the RSI made a bullish divergence, indicating weaker bearish momentum.

The value will quickly break above the 30-SMA if the divergence performs out, permitting USD/CAD to retest the 1.4050 resistance stage. In the meantime, if bears regain momentum, the value will break under the help zone to make recent lows.

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