forexeatrading 
- Fed choice, Canadian inflation in focus this week
- Fed could shift barely dovish relative to forecasts three months in the past
- USD/CAD caught between downtrend resistance and the 50DMA
- RSI trending decrease, MACD rolling over however no affirmation but
Abstract
With a U.S. Federal Reserve rate of interest decision and Canadian inflation information on faucet, will probably be a uncommon second when U.S. commerce coverage isn’t the one focus for USD/CAD merchants this week. Regardless of an unsure outlook making it tough to quantify the influence on each economies, the Loonie’s resilience amid a barrage of unfavourable headlines suggests even a continuation of the established order is probably not sufficient to forestall near-term draw back.
FOMC Tops Occasion Danger
The Fed’s March FOMC choice is the primary occasion for USD/CAD merchants and broader markets this week. Markets assign virtually zero likelihood of a charge change from the present 4.25-4.50% vary, placing the chance of a 25bp reduce at simply 2.7%—basically nada. That shifts the main target to the Fed’s assertion, the revised dot plot monitoring member charge expectations, and Jerome Powell’s press convention.
Supply: TradingView
Heading into the assembly, markets are pricing in three charge cuts by year-end, up from only one a month in the past. In distinction, the Fed’s December 2024 projections had two cuts pencilled in. If the Fed delivers an evaluation in step with market pricing on this event—which is feasible given indicators of waning financial energy and softer inflation—it may spark one other leg decrease for the US dollar, significantly if the GDP forecast for 2025 is downgraded. The prior Fed forecasts from December 2024 are discovered under.
Supply: Federal Reserve
Different key U.S. information releases embrace Monday’s retail gross sales report for February, housing begins and permits on Tuesday, and jobless claims on Thursday. Markets stay hypersensitive to indicators of financial weak point, which means draw back dangers for the greenback could also be disproportionately giant if information undershoots expectations.
In Canada, Tuesday’s inflation report, Thursday’s PPI launch, and Friday’s retail gross sales print are in focus, although their significance has been considerably diluted by tariff uncertainty and the tax vacation launched by the Canadian authorities between December 14 and February 15. Each stories can be noisy in relation to sign, however the core inflation studying—measured as the common of trimmed imply and median CPI—stays key for figuring out underlying traits. Friday’s home value information may also be of curiosity to see if latest mortgage charge reductions following large-scale Financial institution of Canada easing are beginning to carry costs.
Supply: TradingView
USD/CAD faces Make-or-Break Second
Supply: TradingView
USD/CAD sits at a doubtlessly essential juncture, trapped between downtrend resistance courting again to the January highs and the 50-day transferring common under. The latter has been well-respected by merchants, making it a vital near-term stage.
Given how poorly USD/CAD has traded above 1.4500 lately, directional dangers could also be skewing decrease, significantly with bullish momentum fading. RSI (14) is in a downtrend whereas MACD is rolling over, although it has but to substantiate a bearish sign. A break under the 50DMA may generate a bearish setup, permitting for shorts to be established beneath the extent with a cease above for defense.
If such a state of affairs performs out, 1.4270 has acted as each help and resistance a number of occasions over the previous three months, making it the primary key draw back stage. Past that, the February swing low of 1.4150 comes into focus, adopted by 1.4100 and 1.4000 as further draw back targets.
Conversely, if USD/CAD breaks and closes above the January 2025 downtrend, it will problem the bearish bias, opening the way in which for potential longs focusing on the highs set at first of March.
