The USD/CAD forecast turns bullish today as the Canadian dollar is losing ground, spurred by the Bank of Canada’s observation of persistently low productivity in Canada. Moreover, the loonie weakened alongside plummeting oil prices.

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BoC’s Carolyn Rogers said that Canada’s economy was vulnerable to inflation due to low productivity. Therefore, she urged businesses to increase productivity by supporting investment. Moreover, the BoC expects little growth in the economy this year. It is very difficult for a central bank to control inflation when the economy is weak. The best weapon against inflation is high interest rates. However, if the economy is weak, higher borrowing costs could lead to a recession before inflation gets to the central bank’s target. 

Meanwhile, data from Canada revealed a 0.8% increase in wholesale trade in February. Furthermore, USD/CAD rose as oil prices declined. This decline came due to a surge in US crude inventories, which reflects weaker demand. Additionally, investors do not expect any policy changes when the OPEC group meets next week. 

Elsewhere, the dollar was steady as investors prepared for more inflation data this week. The core PCE price index will likely cause a lot of volatility as it will shape the Fed’s rate-cut outlook.

USD/CAD key events today

No major events are coming from Canada or the US today. As a result, the pair will likely consolidate. 

USD/CAD technical forecast: Price faces 1.3600 hurdle following 30-SMA rebound

USD/CAD 4-hour chart

On the charts, the USD/CAD price is facing the 1.3600 barrier again after finding support at the 30-SMA. At the same time, the price bounced off the 0.382 Fib retracement level and might make a new high. The return of bulls at the SMA line confirms a strong bullish bias. Meanwhile, the RSI, which trades above 50, supports solid bullish momentum. 

Therefore, bulls will likely attempt to break above the 1.3600 key resistance level. A break above would allow the price to start trending after a period of consolidation. On the other hand, if the 1.3600 resistance holds firm as it has done before, the price will likely fall back to the 1.3475 support.

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