USD/CAD Price Forecast: Bulls turn cautious ahead of US CPI report and BoC decision

USD/CAD pulls back from a multi-year top, though the downside seems limited.
Rising oil prices underpins the Loonie and exert pressure on the currency pair.
The technical setup supports prospects for the emergence of some dip-buyers.

Haresh Menghani FXStreet

The USD/CAD pair edges lower during the Asian session on Wednesday, though it lacks follow-through and remains close to the highest level since April 2020 touched the previous day. Spot prices currently trade just above mid-1.4100s, down less than 0.10% for the day, as traders keenly await the US consumer inflation figures and the Bank of Canada (BoC) policy decision before placing fresh directional bets.

In the meantime, rising Crude Oil prices seem to underpin the commodity-linked Loonie and exert some pressure on the USD/CAD pair. That said, bets for a larger BoC rate cut might hold back traders from placing aggressive bullish bets around the Canadian Dollar (CAD). Furthermore, the growing market conviction that the Federal Reserve (Fed) will adopt a cautious stance on cutting interest rates assists the US Dollar (USD) in preserving its gains registered over the past three days and acts as a tailwind for the currency pair.

From a technical perspective, the recent sustained breakout and acceptance above the 1.4100 mark was seen as a key trigger for bullish traders. Moreover, oscillators on the daily chart are holding comfortably in positive territory and are still away from being in the overbought zone, suggesting that the path of least resistance for the USD/CAD pair remains to the upside. Hence, any further slide might still be seen as a buying opportunity and remain limited near the aforementioned handle, which should now act as a pivotal point.

Some follow-through selling, leading to weakness below the 1.4070 support zone, might prompt some long-unwinding trade and drag the USD/CAD pair to the 1.4020 area en route to the 1.4000 psychological mark. The corrective pullback could extend further towards the next relevant support near the 1.3960-1.3950 area en route to the November 25 low, around the 1.3925 region.

On the flip side, the 1.4200 mark might continue to act as an immediate barrier, above which the USD/CAD pair could surpass an intermediate hurdle near the 1.4260 area and test the April 2020 swing high, around the 1.4300 round figure. Spot prices could eventually climb to the 1.4335-1.4340 region.

USD/CAD daily chart

Economic Indicator

BoC Interest Rate Decision

The Bank of Canada (BoC) announces its interest rate decision at the end of its eight scheduled meetings per year. If the BoC believes inflation will be above target (hawkish), it will raise interest rates in order to bring it down. This is bullish for the CAD since higher interest rates attract greater inflows of foreign capital. Likewise, if the BoC sees inflation falling below target (dovish) it will lower interest rates in order to give the Canadian economy a boost in the hope inflation will rise back up. This is bearish for CAD since it detracts from foreign capital flowing into the country.

EUR/USD remains offered below 1.1600, seems vulnerable near multi-month low

The EUR/USD pair struggles to capitalize on the overnight bounce from the 1.1530 region, or the lowest level since November 2025, and lower for the third consecutive day on Wednesday. Spot prices slide back below the 1.1600 mark during the Asian session and seem vulnerable to slide further.

GBP/USD weakens to near 1.3300 as geopolitical risks bolster US Dollar

The GBP/USD pair attracts some sellers to around 1.3310 during the early European session on Wednesday. Escalating conflict in the Middle East triggers a "flight to safety," supporting the US Dollar against the Pound Sterling. Traders will take more cues from the US ADP Employment and ISM Services Purchasing Managers Index reports, which are due later on Wednesday.

Gold sticks to intraday gains above $5,150; upside seems limited amid bullish USD

Gold preserves its modest intraday gains through the Asian session on Wednesday and currently trades just above the $5,150 level, up around 1.30% for the day. Investors remain concerned about a prolonged conflict in the Middle East and its impact on the global economy amid an already uncertain environment.

Bitcoin, Ethereum and Ripple struggle for direction as consolidation persists

Bitcoin, Ethereum and Ripple prices trade with a cautious tone at the time of writing on Wednesday as upside momentum continues to fade across the broader crypto market. BTC remains within a parallel channel, ETH struggles below key resistance, while XRP remains fragile within a descending channel. These top three cryptocurrencies by market capitalization continue to struggle to establish a directional bias amid the consolidation phase.

When rates start driving the bus through a war zone

The volatility regime itself is also changing character. EM carry trades thrive in calm markets. They suffocate in environments that resemble Buckaroo Banzai trading conditions, where headlines move faster than models. That is exactly the world investors are now trying to recalibrate to. Euro rate volatility had been remarkably subdued even while equities were wobbling. That stability is now being questioned, and once volatility leaks into rates it rarely stays contained. Indeed, carry trades love calm seas. War turns the ocean into white water.

Ripple falters amid sell-off jitters and negative funding rates

Ripple (XRP) has come under pressure, drifting lower to $1.35 at the time of writing on Tuesday. The over 2% correction looks poised to erase the previous day’s gains, which lifted the remittance token to $1.42.