The USD/CAD price analysis shows anticipation building ahead of crucial inflation figures from Canada. Meanwhile, the dollar recovered slightly on Monday as market participants looked forward to the FOMC policy meeting minutes. However, the currency held near lows hit last week after downbeat sales data and delays in Trump’s tariffs.

Canada will release its consumer inflation report later in the day, shaping the outlook for Bank of Canada rate cuts. Economists believe price pressures increased, with the monthly figure rising by 0.1% after a 0.4% drop. Meanwhile, the annual figure might increase by 2.5%, compared to the previous reading of 2.4%.

Such an outcome would ease pressure on the Bank of Canada to lower borrowing costs. Consequently, the loonie would continue its recent rally. On the other hand, if inflation is lower than expected, the BoC would be under immense pressure to cut, especially with uncertainty regarding Trump’s tariffs. 

Meanwhile, the dollar recovered after a bearish week. Data on Friday revealed a sharp decline in sales, leading to a surge in Fed rate cut expectations. At the same time, a delay in Trump’s reciprocal tariffs weakened demand for the greenback. This week, traders will watch for policy clues in the FOMC minutes. 

USD/CAD key events today

• Canada CPI m/m
• Canada median CPI y/y
• Canada trimmed CPI y/y

USD/CAD technical price analysis: Bears find their feet after range breakout

(Click on image to enlarge)

USD/CAD 4-hour chart

On the technical side, the USD/CAD price has paused its decline near the 1.4150 support level. This has allowed the price to recover slightly. However, it still trades below the 30-SMA with the RSI under 50, suggesting a bearish bias. Therefore, even if the price continues higher, it might fail to break above the 30-SMA. 

The beamish move comes after a consolidation period when the price held steady between the 1.4300 support and the 1.4501 resistance levels. Initially, bulls broke out of this range after a spike in volatility. However, the price fell back into the area before breaking below the range support. 

Given the strong bearish bias, USD/CAD might soon bounce lower to retest the 1.4150 support level. A break below this level will make a lower low confirming the new bearish trend.

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