The USDCAD has moved lower (higher CAD) after the cut rates by 25 basis points and said that the “current policy rate at about the right level to keep inflation close to 2% while helping the economy through this period of structural adjustment.”
The USDCAD moved lower in the aftermath of the Bank of Canada’s 25-basis-point rate cut.
The central bank noted that the current policy rate is now “about the right level” to keep inflation anchored near 2% while helping the economy adjust to a period of structural change. That acknowledgment suggested that policymakers believe they are close to the end of their easing cycle, yet it also reinforced that rates are likely to stay low for an extended period as the economy works through uneven growth and productivity challenges.
The Canadian dollar strengthened, pushing the USDCAD pair back below its 200-day moving average at 1.3929. Just above that area, near 1.3931, sits a well-defined swing zone that has served as a floor going back to early October (see red numbered circles on the chart above). As long as price action remains beneath both the 200-day MA and the swing-zone ceiling, downside momentum is likely to dominate.
From a purely technical perspective, the next target on the downside comes at the 50% midpoint of the recent move higher, located at 1.3903. That level aligns closely with the upper boundary of a broader support band between 1.3892 and 1.3904. This region will be closely watched for potential buying interest or profit-taking, as it represents a natural retracement zone where momentum traders may pause or reassess. A decisive break below this support area would further validate the bearish structure and open the door toward deeper retracements in the days ahead.
Close risk? 1.39315 near the 200 day MA and the old swing low from earlier this month.
