Canadian Dollar buckles further on Monday, declines another quarter percent

• The Canadian Dollar extended its recent declines against the Greenback.
• Bank of Canada rate call due on Wednesday, looming rate cut trims CAD.
• The CAD is down over 3% against the USD since September.

The Canadian Dollar (CAD) shed another quarter of a percent against the Greenback at the start of the new trading week. The Loonie backslid into a fresh eleven-week low as CAD markets brace for a widely-anticipated 50 bps rate trim from the Bank of Canada (BoC) during the midweek market session on Wednesday.

Daily digest market movers

• CAD traders continue to make a broad-market pivot out of the Loonie ahead of the BoC's rate call on Wednesday.
• The BoC is widely expected to trim interest rates by a further 50 bps in an effort to shore up decaying economic figures.
• Fedspeak is a key driver in risk sentiment flows on Monday as key Fed officials make early-week appearances.
• Read more:
  Fed's Kashkari: I see modest cuts over the next quarters
  Fed's Logan: Gradual rate cuts on the cards if economy meets forecasts
• US Retail Sales due Thursday to drive late-week Greenback market momentum.
• Canadian Retail Sales figures due on Friday to serve as a post-rate cut signal of where the Canadian economy is headed in spite of moves from the BoC.

Canadian Dollar price forecast

The USD/CAD pair continues its bullish march, trading around 1.3833 on the daily chart after successfully breaching key resistance levels in recent sessions. The price has risen decisively above both the 50-day EMA at 1.3645 and the 200-day EMA at 1.3617, confirming bullish momentum. These moving averages are now acting as significant support levels, reinforcing the upward bias. With the pair trading near its recent highs, the next psychological resistance to watch is the 1.3900 level, followed by a potential retest of 1.4000 if momentum continues.

The MACD histogram continues to expand in positive territory, suggesting strong bullish momentum. The MACD line has crossed above the signal line, reinforcing the positive outlook. However, the price is approaching overbought conditions, so traders should be cautious of a potential short-term pullback or consolidation phase before the next leg higher. A failure to maintain momentum could lead to a correction toward the 1.3700 area, aligning with the 50-day EMA as a key support zone for buyers to re-enter.

USD/CAD daily chart