USD/CAD Weekly Forecast: Traders Brace for a Major BoC Cut

• The dollar strengthened amid increased bets of a Trump presidency.

• Data from the US showed an unexpected jump in retail sales.

• Traders expect the Bank of Canada to implement a 50-bps rate cut next week.

The USD/CAD weekly forecast indicates solid bullish sentiment as traders price in a supersized BoC rate cut. Also, WTI prices have come under pressure too.

Ups and downs of USD/CAD

The USD/CAD pair had a bullish week as domestic data supported the US dollar and weakened the Loonie. At the same time, the dollar strengthened amid increased bets of a Trump presidency.

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Data from the US showed an unexpected jump in retail sales, indicating a robust economy. Meanwhile, inflation in Canada fell more than expected, boosting bets for BoC rate cuts. At the same time, traders bought the dollar on increased bets of a Trump win that would boost inflation.

Next week’s key events for USD/CAD

Market participants will focus on the Bank of Canada policy meeting in the coming week. Furthermore, Canada will release its retail sales report. On the other hand, the US will release data on durable goods orders. 

Traders expect the Bank of Canada to implement a 50-bps rate cut next week. This would be the fourth cut, meant to spur economic growth. High interest rates have left Canada’s economy is a poor state. At the same time, inflation has eased to 1.6%, motivating the central bank to lower borrowing costs. 

Meanwhile, the durable goods data from the US will show the state of economic demand. Recent US data has revealed a resilient economy that has boosted the dollar.

USD/CAD technical weekly forecast: Bullish momentum pauses at 1.3825

On the technical side, the USD/CAD price has had a robust bullish rally and is currently facing the 1.3825 key resistance level.  Furthermore, the price trades well above the 22-SMA, a sign that bulls are holding the reigns. 

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The pair has been climbing steeply, with price action showing very few bearish candles. Bulls broke above the SMA and the 1.3600 resistance level and are now challenging 1.3825. However, after a long rally with no pullbacks, the price might pause to allow the SMA to catch up. 

A break above the 1.3825 resistance will pave the way for a retest of the 1.4001 key psychological level. On the other hand, if the price reverses at the 1.3825 resistance level, it might fall back to the 1.3600 support level.

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