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Bank of Canada takes action tonight! Canadian dollar bulls have the upper hand? The latest market trend + technical analysis
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Hello everyone, today XM Forex will bring you "【XM Group】: Bank of Canada takes action tonight! Has the Canadian dollar bulls prevailed? Latest market conditions + full analysis of technical aspects". Hope it will be helpful to you! The original content is as follows:
On Wednesday (April 16), the foreign exchange market is in a highly sensitive period, with the focus of the US dollar against the Canadian dollar market focusing on the Bank of Canada (BoC) interest rate resolution to be announced in the evening, and subsequent press conference by Governor Tiff Macklem.
Global uncertainty, especially the risk aversion caused by Trump's tariff remarks, is putting significant pressure on Canada's economy and monetary policy. This article will analyze the expectations of the Bank of Canada’s resolution and its potential impact on the Canadian dollar trend based on the latest market trends, xm-links.combining fundamentals and technical aspects.
State analysis: rising inflation coexisted with tariff clouds
The Bank of Canada's resolution attracted much attention. The market generally expects it to keep the policy interest rate unchanged at 2.75%, and suspend seven consecutive interest rate cuts since last year. This expectation is mainly driven by two factors: one is the rebound in domestic inflation pressure, and the other is the external uncertainty brought about by Trump's tariff remarks.
Inflation pressure rises. According to the latest data, Canada's inflation rate climbed to 2.6% in February, a record high of eight months, exceeding the central bank's target range of 2%. The "Business Outlook Survey" released by the central bank on April 7 further revealed changes in inflation expectations: xm-links.companies no longer expect the slowdown in imported prices, and 65% of the surveyed xm-links.companies expect that if the tariff scope is expanded, their costs will rise significantly, of which 40% plan to raise the selling price. This upward trend in inflation expectations forces central banks to take a more cautious stance on monetary policy. Analysts from well-known institutions pointed out that the performance of economic data in January and February was stronger than expected, providing support for the central bank to remain calm, and the possibility of further easing in the short term has dropped significantly.Low.
The shadow of tariff rhetoric. Since Trump returned to the White House in January, his repeated tariff policies have become a source of uncertainty in global markets. The impact of tariff rhetoric is particularly significant for Canada, which is highly dependent on U.S. trade. The Business Outlook Survey shows that Canadian xm-links.companies and consumers' expectations for the risk of economic recession in the next year have increased significantly, and some xm-links.companies have suspended investment and recruitment plans, and employment expectations have dropped to the lowest level since the epidemic. Central Bank Governor McClum made it clear in his speech on March 20 that the uncertainty of tariff policies forced the central bank to adjust its monetary policy framework to make it more cautious rather than forward-looking. He stressed that the Bank of Canada will firmly uphold its low inflation target, but external risks undoubtedly exacerbate the xm-links.complexity of policy formulation.
This resolution and McClum’s press conference are expected to have in-depth discussions on tariff risks. Market insiders generally believe that the central bank statement will continue its cautious tone, emphasizing its xm-links.commitment to price stability, and may mention close monitoring of future economic data. Analysts at well-known institutions expect the central bank to downplay guidance on future interest rate cuts in its wording, instead highlighting the potential impact of external risks on the economy and inflation.
Technical analysis: The signal behind the strength of the Canadian dollar
From the technical perspective, the recent trend of the US dollar against the Canadian dollar is relatively short, indicating the strength of the Canadian dollar xm-links.compared with the US dollar. The following are analyzed based on the key indicators of the daily chart:
Bolling bands and price dynamics
Currently, the US dollar against the Canadian dollar is 1.3906, which is above the lower rail of the Bollinger band 1.3833, but is significantly lower than the middle rail 1.4178 and upper rail 1.4523. The opening of the Bollinger Band has significantly expanded, indicating that market volatility is intensifying. After the price falls below the 200-day moving average (1.3995), further downward pressure remains in the short term. Well-known analysts pointed out that if the Canadian dollar continues to be strong, the US dollar against the Canadian dollar may test the year-on-year low of 1.3838 on April 11, and even further fall to the November 2024 low of 1.3817. If it falls below the latter, the September low of 1.3418 will become the next key support.
RSI and ADX signals
Relative strength indicators (RSI, 14 cycles) are currently 34.1687, which is on the edge of oversold areas, suggesting the possibility of a technical rebound in the short term. However, the average trend indicator (ADX) is close to 25, indicating that the current downtrend still has momentum and short positions may continue to dominate in the short term. Market analysts believe that oversold conditions may trigger a brief rebound, but the overall trend will remain downward unless there is a major reversal in the fundamentals.
Resistance and Support
If the US dollar rebounds against the Canadian dollar, the first resistance is at the April high of 1.4414, and further resistance is at the March high of 1.4542. If the breakthrough exceeds 1.4542, the 2025 high of 1.4792 (February 3) may re-enter the vision. However, the current market momentum is biased towards the Canadian dollar, and the possibility of breaking through the upper resistance in the short term is low.
Market sentiment
Some traders and analysts are cautiously optimistic about the Canadian dollar trend. Some users pointed out that the recent rebound of the Canadian dollar is related to the exceeding expectations of Canadian economic data and the stabilization of oil prices, but also warned that tariff risks may limit the upside potential of the Canadian dollar. A senior trader xm-links.commented: "After USD/CAD falls below the 200-day moving average, the technical side is obviously short, but you need to be wary of short-term pullbacks in oversold conditions." Another user emphasized that McClum's speech will be the key, and if the central bank's wording is biased towards eagle, the Canadian dollar may strengthen further.
Future Trend Outlook
Looking forward, the US dollar against the Canadian dollar will rely heavily on the tone of the Bank of Canada's resolution and changes in global risk sentiment. In fundamentals, if the central bank statement and McClum speech strengthen their vigilance on inflation and downplay short-term interest rate cut expectations, the Canadian dollar may continue to be supported, and the US dollar against the Canadian dollar may further fall to the 1.3838-1.3817 region. However, geopolitical risks such as Trump's tariff remarks and the situation in Russia and Ukraine may intensify market risk aversion and push up demand for the US dollar, thereby limiting the upward space of the Canadian dollar.
Technically, the US dollar is currently in the oversold area against the Canadian dollar and may experience a technical rebound in the short term, testing resistance around 1.3995 (200-day moving average). However, as long as the price fails to effectively break through 1.4414, the overall trend will still be downward. Traders need to pay close attention to the price reaction after the day's resolution, especially the support strength of the Bollinger band lower track 1.3833. If it falls below this level, the next target may point to 1.3817 or even lower 1.3418.
In general, the Bank of Canada’s resolution and its subsequent statements will be the core factors driving the short-term trend of the US dollar against the Canadian dollar. Market participants should focus on the latest assessment of inflation and tariff risks by the central bank, and at the same time, xm-links.combine technical signals to carefully judge the market trends.
The above content is all about "【XM Group】: Bank of Canada takes action tonight! The Canadian dollar bulls have the upper hand? The latest market + full technical analysis" is carefully xm-links.compiled and edited by the editor of XM Forex. I hope it will be helpful to your trading! Thanks for the support!
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