BOC decision - trading the uncertainty

Markets are narrowly leaning toward no rate cut from the Bank of Canada this Wednesday. Markets were pricing a 58% chance of a pause as of Friday last week. With traders nearly evenly split, short-term volatility in USD/CAD is possible.

While the Bank had previously signaled it would "proceed carefully" on future rate cuts, that guidance came before the heightened risks tied to the U.S. “Liberation Day” tariff announcements.

From a technical standpoint, there are early signs the pair may be forming a near-term bottom. If the BOC holds rates steady, USD/CAD could retake its 200-day moving average, opening the door for a move toward resistance near 1.4100.