empty
19.06.2025 12:42 AM
The Canadian Dollar Still Looks Like a Favorite

Markets remain cautious as several high-impact events loom that could significantly alter the risk balance—namely, the FOMC meeting on Wednesday evening and a potential U.S. intervention in the war between Israel and Iran.

The Bank of Canada's meeting minutes, published on Tuesday, reveal that the central bank considered cutting rates but ultimately chose not to, citing high uncertainty regarding tariffs and their economic consequences. During discussions, it was noted that Canada's economy shows "greater resilience than expected," though expectations for the second quarter are "much weaker." Combined with signs of persistent core inflation, this prevented the BoC from proceeding with a rate cut.

The FOMC meeting is in focus even though markets are nearly certain the Federal Reserve will hold rates steady. Attention will center on new economic projections and the updated dot plot. One potential development is that the committee could remove one of the forecasted rate cuts for this year, supported by a robust labor market—bolstered further by tighter immigration policies, which may lead to renewed wage growth.

Disinflation trends remain uncertain, especially with the risk of a sharp spike in oil prices if the Middle East conflict escalates. Rising tariffs, combined with that, could intensify inflationary pressures.

If the Fed adjusts its rate-cut outlook toward a slower pace, this could support the U.S. dollar and potentially trigger an upward move in USD/CAD.

Last week was uneventful for the loonie—macroeconomic data had little impact on price action. Until the inflation report, due on June 24, volatility is expected to stay subdued unless geopolitical risks escalate.

Net short positioning on CAD narrowed significantly during the reporting week by $1.09 billion to –$6.81 billion. However, the imbalance still isn't in CAD's favor. That said, the fair value estimate has dropped well below the long-term average, supporting expectations of further downside in USD/CAD.

This image is no longer relevant

USD/CAD continues to decline, setting a new low not seen since October 2024. At present, there are no technical signs of a bullish reversal. The next target is support at 1.3410–1.3430. The dollar looks somewhat oversold on the daily chart, increasing the risk of a corrective upward retracement. In this case, the 1.3810–1.3830 zone will act as resistance, and a breakout above that level appears unlikely.

Kuvat Raharjo,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

XAU/USD. Analysis and Forecast

Gold prices are maintaining positive momentum for the second consecutive day. Ongoing uncertainty surrounding U.S. President Donald Trump's trade policy and its impact on the global economy continues to weigh

Irina Yanina 19:24 2025-07-10 UTC+2

USD/CHF. Analysis and Forecast

Today, the USD/CHF pair retraced part of its decline from a new weekly low recorded during the Asian session and has temporarily paused its downward movement, stopping short

Irina Yanina 12:26 2025-07-10 UTC+2

Market dupes sellers

The split within the Federal Reserve, NVIDIA's successes, and a successful auction of 10-year US Treasury bonds allowed the S&P 500 to ignore the tariff chaos. Donald Trump announced tariffs

Marek Petkovich 12:02 2025-07-10 UTC+2

What to Watch on July 10th: Fundamental Event Overview for Beginners

Macroeconomic Report Analysis: There are very few macroeconomic publications scheduled for Thursday, and none of them are expected to be significant. So what could traders focus on today? The second

Paolo Greco 09:07 2025-07-10 UTC+2

GBP/USD Overview on July 10, 2025

On Wednesday, the GBP/USD currency pair maintained its downward movement, which is corrective in nature and could end at any moment. The price remained below the moving average line

Paolo Greco 07:26 2025-07-10 UTC+2

EUR/USD Overview on July 10, 2025

The EUR/USD currency pair continued to trade very calmly on Wednesday. The pair maintained a slight downward bias, as we've noted in all of our recent articles. However, the current

Paolo Greco 07:16 2025-07-10 UTC+2

USD/CAD. Analysis and Forecast

Today, the USD/CAD pair is showing signs of recovery, rising toward the 1.3700 level and approaching the weekly high reached earlier. Fundamental factors point to bullish dominance and the potential

Irina Yanina 12:46 2025-07-09 UTC+2

Markets unfazed by Trump's new tariff threats

Donald Trump's bark is louder than his bite. Markets have grown so accustomed to his rhetoric that the S&P 500 barely flinched at the White House's latest threat to slap

Marek Petkovich 11:53 2025-07-09 UTC+2

AUD/USD. Analysis and Forecast

The AUD/USD pair is holding steady at current levels with a bullish bias but limited movement following the release of inflation data from China—Australia's key trading partner. In June

Irina Yanina 11:35 2025-07-09 UTC+2

USD/JPY. Analysis and Forecast

On Wednesday, the Japanese yen extended its decline for the third consecutive day, pushing the USD/JPY pair to a new two-week high above the key 147.00 level during the Asian

Irina Yanina 11:23 2025-07-09 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.