Canadian Dollar retreats further amid growing market uncertainty

• The Canadian Dollar eased another 0.6% lower on Monday against the Greenback.
• Bank of Canada rate call due on Wednesday, expected to cut another 25 bps.
• Market sentiment continues to sour as Trump administration tilts away from "recession" talk.

The Canadian Dollar (CAD) shed further ground on Monday, extending last Friday's late-week declines and shedding another six-tenths one percent against the US Dollar. CAD markets are coiling ahead of the Bank of Canada's (BoC) upcoming rate call during the midweek, which is expected to reduce interest rates another quarter of a percent to 2.75%.

Adding to market pressures forcing the Loonie lower are ongoing trade war and recession fears. Market sentiment has soured recently as US President Donald Trump's waffling on his own tariff policy has left markets uneasy about the US' ability to maintain price stability as US businesses grapple with steep potential price increases.

Daily digest market movers: Risk sentiment plummets on fresh recession fears

• Broad-market sentiment has soured steeply on Monday as investors pull out of equities and bonds, piling into the US Dollar and forcing the Loonie lower.
• US President Donald Trump, when asked about a possible recession looming over the US economy, tried to wave off the suggestion by branding it as a "transition period" for the US economy. Markets reacted poorly.
• Key US inflation data is due this week on Wednesday, and investors are hoping for another cooldown in headline US Consumer Price Index (CPI) inflation, which accelerated in January.
• The BoC's latest rate call is also due on Wednesday, and is expected to trim another 25 bps from its main reference rate.
• On top of US CPI inflation, US Producer Price Index (PPI) inflation is due on Thursday, where markets are hoping for a similar easing in business-level inflation pressures.

Canadian Dollar price forecast

The Canadian Dollar continues to churn within a familiar consolidation range. USD/CAD has risen back into all-too-familiar chart territory near 1.4450. The 1.4500 major price handle remains a key technical barrier, keeping USD/CAD pinned in an uneasy sideways channel.

USD/CAD caught a fresh bounce from the 50-day Exponential Moving Average (EMA) near 1.4315. However, Loonie weakness appears to have run its course and the pair is quickly running into steep technical resistance. A near-term technical floor is priced in near the low end of USD/CAD's ongoing channel, near the 1.4300 handle.

USD/CAD daily chart