Strategists see the pair testing key resistance as Canada’s April CPI data may influence BoC rate expectations and bond markets.
USD/CAD has recovered from January lows near 1.3530/1.3480, approaching the 200-day moving average at 1.3815, which analysts view as initial resistance. A failure to break above could extend the downtrend, while support lies at 1.3640, last week’s low.
The pair stalled at the 50-day moving average around 1.3740, with the 200-day average at 1.3812 acting as the next hurdle. Market focus shifts to Canada’s April CPI, where headline inflation is expected to rise to 3.1% year-over-year from 2.9% in March, while core inflation remains steady at 2.2%.
Overnight index swaps price nearly two Bank of Canada hikes by October, aligning with broader G10 trends. This would lift the policy rate to 2.75%, the midpoint of the BoC’s neutral range, potentially impacting Canadian bonds and USD/CAD volatility.