USDCAD moves towards 1.445 level and upper boundary of sideways trend again

The USDCAD currency pair, as expected in the previous forecast, continues to move within a medium-term sideways trend. A new high from 2022, set last week, was not enough to break the upper boundary of the range, nor was the subsequent pullback to 1.43 support. Now the bulls are aiming at a gradual recovery of prices to the level of 1.445, where they will have another chance to initiate a directional price trend.

Today, traders' attention is focused on the first meetings of the US Fed and the Bank of Canada in 2025. While market participants are almost unanimously expecting the US regulator to keep rates steady and maintain its hawkish rhetoric, the Canadian central bank's outlook is less certain. The chances of another monetary policy easing are around 80%, but investors are looking forward to the release of new economic forecasts in the first place.

According to a Reuters poll, traders are divided on the impact of Donald Trump's 25% duties on Canadian imports. Nathan Janzen, assistant chief economist at RBC, is expecting faster interest rate cuts in the country. Even after today's 0.25% reduction, the key rate will still be at 3%. In order to provide truly strong support to the Canadian economy, the cost of borrowing has to go even lower.

Bank of America analysts expect a significant weakening of the Canadian dollar in case the US imposes duties. This is the only way for Canadian companies to maintain the competitiveness of their goods and services in the US market. According to the experts, after a new testing of 1.45 level USDCAD might rise to 1.5 and 1.55 levels, which has not happened for more than 20 years.

The Stochastic indicator confirms a new wave of USDCAD growth within the current sideways trend. It is recommended to fix at least a part of long positions at 1.445, as there may be no exit from the range again.

Consider the following trading strategy:

Buy USDCAD at the current price. Take profit – 1.445. Stop loss – 1.43.