- The USD/CAD weekly forecast indicates uncertainty ahead of Trump’s tariffs.
- The US and Canada released downbeat retail sales data.
- The FOMC policy meeting resulted in a pause, as expected.
The USD/CAD weekly forecast indicates some uncertainty as traders speculate on the likely impact of Trump’s looming tariffs on Canada.
Ups and downs of USD/CAD
The USD/CAD price had a bearish close but ended the week well above its lows. The price fluctuated as market participants digested economic data and policy announcements. Moreover, traders were gearing up for more Trump tariffs that could ignite more trade wars.
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The US and Canada released downbeat retail sales data, indicating weaker-than-expected consumer spending in both countries. Meanwhile, the FOMC policy meeting resulted in a pause, as expected. However, Powell restated that there was no rush to lower borrowing costs given the uncertainty surrounding Trump’s trade policies.
Next week’s key events for USD/CAD
Next week, traders will monitor reports from the US on durable goods and gross domestic product. Meanwhile, Canada will release its GDP report.
The GDP reports will contain clues on the health of the US and Canada’s economies. The US has experienced weak demand, with recent reports showing weaker employment, inflation, and sales. A weak GDP report will pressure the Fed to lower borrowing costs. On the other hand, Canada’s economy faces the threat of punitive US tariffs. Therefore, the Bank of Canada is already under immense pressure to preserve growth. A downbeat GDP report would increase rate-cut expectations.
USD/CAD weekly technical forecast: Bulls and bears battle around 22-SMA
On the technical side, the USD/CAD price remains in a tight range between the 1.4150 support and the 1.4501 resistance levels. Within this consolidation, the price trades in the middle, near the 22-SMA, showing neither bears nor bulls have the upper hand.
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Next week, the price will detach from the SMA. If it trades above, bulls will retest the range resistance, aiming for higher highs. On the other hand, if the price trades below the SMA, it will revisit the range support, targeting lower lows.
However, there is a higher chance that bulls will win this battle because the price was in an uptrend before it paused. Therefore, the range might only be a brief stop for bulls as they regain momentum. A break above the range resistance will allow USD/CAD to retest the 1.4804 resistance level.
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