The Canadian dollar faces heightened downside pressure against the US dollar after USD/CAD broke through critical technical resistance levels, according to Societe Generale analysts. The breach comes as markets anticipate the Bank of Canada will hold its benchmark interest rate steady at 2.25% in its upcoming decision.
The technical breakdown signals potential further weakness for the loonie, with the currency pair positioned to extend gains for the greenback. Traders are closely monitoring the BoC’s policy stance amid a diverging monetary landscape between Canada and the United States. The expected rate pause from the Canadian central bank contrasts with ongoing US dollar strength, creating unfavorable conditions for CAD bulls.
Currency traders and forex desks should prepare for continued CAD vulnerability in the near term as the technical picture aligns with fundamental headwinds. Societe Generale’s analysis suggests the path of least resistance remains higher for USD/CAD following the resistance break.
FXnCO Insight
Position for extended USD/CAD upside with stop-losses below the recently broken resistance level, now acting as support.
Source: FXStreet