Introduction to USDCAD
The USDCAD is little changed in up and down trading to start the new trading week. This lack of movement comes after the Bank of Canada (BoC) held its overnight rate steady at 2.25% in its final policy decision of 2025. The decision was made due to the Canadian economy’s surprising resilience, despite global uncertainties and headwinds from U.S. tariffs.
Bank of Canada’s Decision
The BOC’s decision to hold the rate at 2.25% signifies a pause in its easing cycle after cuts earlier in the fall. BOC Macklem noted that the Canadian economy has proven stronger than expected, with GDP growth and labor market improvements exceeding expectations. With headline inflation stabilizing near the 2% target, the Bank deemed the current policy stance appropriate as long as the economy evolves as projected.
Canada’s Inflation Report
Canada’s inflation report for November came in slightly softer than anticipated, with headline CPI holding steady at 2.2% year-over-year. The data provided reassurance for the Bank of Canada as underlying pressures eased. However, food inflation accelerated to 4.7%, driven by severe price spikes in coffee and frozen beef. This increase in food inflation may affect Canadian households, particularly those with limited budgets.
Technical Analysis of USDCAD
From a technical perspective, the bias in USDCAD continues to favor the downside. The pair peaked near 1.4139 in early November and attempted to revisit that high on November 21, but momentum stalled short at 1.4130. This failure marked an important turning point, as the price has since worked progressively lower, eventually reaching a new cycle low at 1.3747. The sequence of lower highs and lower lows underscores that sellers remain firmly in control of the broader short-term trend.
Key Technical Levels
Throughout this decline, the market has repeatedly shown where sellers are willing to defend risk. Each corrective bounce has run into selling pressure near the falling 100-hour moving average, a level that has become increasingly important as the trend has matured. Since November 26, the 100-hour MA has been tested on four separate occasions, and each test has failed, with price rotating back to the downside shortly afterward.
Conclusion
In conclusion, the USDCAD remains technically biased lower, with sellers continuing to control rallies. As long as the price remains below the declining moving average, rallies are likely to be viewed as selling opportunities rather than trend reversals. The Bank of Canada’s decision to hold the rate at 2.25% and the softer-than-anticipated inflation report support the bearish bias. The key technical levels, including the 100-hour moving average, will continue to shape the USDCAD’s movement in the coming weeks.
