**CAD Currency Crosses: Technical Analysis and Market Outlook Ahead of FOMC and BoC Decisions**
*By Matt Weller, original content at FOREX.com. This article expands on and analyzes current CAD cross trends and technical setups in the lead-up to key central bank events.*
As global currency markets prepare for pivotal central bank announcements from both the Federal Reserve (FOMC) and the Bank of Canada (BoC), forex traders are watching key Canadian Dollar (CAD) crosses closely. CAD pairs are showing nuanced technical patterns and potential setups influenced by diverging monetary policy outlooks, commodity price dynamics, and broader macroeconomic indicators.
This comprehensive analysis will review several CAD crosses — particularly EUR/CAD, GBP/CAD, CAD/JPY, AUD/CAD, and USD/CAD — and explore possible scenarios and technical cues as traders brace for increased volatility and directional shifts.
## Key Central Bank Decisions: Fed and BoC on Deck
Two significant monetary policy decisions are coming into focus:
– **Federal Open Market Committee (FOMC) decision (Wednesday June 12, 2024):**
– The Fed is widely expected to hold rates unchanged amid persistent inflationary pressures and a resilient labor market.
– However, markets will scrutinize the updated Summary of Economic Projections (SEP) and the “dot plot” to assess the likelihood of rate cuts later this year.
– Strong US economic data has led many economists to push forecasts for rate cuts into late 2024 or even 2025.
– **Bank of Canada (BoC) policy meeting:**
– The BoC recently became the first G7 central bank to initiate a rate cut in June, reducing its key policy rate by 25 basis points to 4.75%.
– Inflation in Canada has cooled to 2.7% (April 2024), and GDP growth has been tepid at best. These factors support a more dovish stance by the BoC.
– Markets now expect gradual rate cuts through the second half of 2024 and early 2025.
This divergence in monetary policy paths between the BoC and the Fed is setting the stage for movement across CAD crosses, especially those paired with central bank counterparts that remain relatively hawkish.
## EUR/CAD: Trend Break Suggests Further Upside
The EUR/CAD currency pair recently broke a significant downtrend line extending back to mid-2022. This technical breakout suggests a reversal in sentiment and a shift in trend direction.
– **Technical Highlights for EUR/CAD:**
– The pair rallied off long-term support near the 1.43 area.
– A breakout above the 200-day moving average and descending trendline signals bullish momentum.
– Current resistance comes in near 1.4850 to 1.4900.
– Support now lies around the 1.4700 handle and the 200-day MA, which could act as a launching point for further gains.
– **Bullish Catalysts:**
– The European Central Bank (ECB) has begun signalling gradual rate cuts, but not as aggressively as the BoC. If Eurozone inflation remains sticky, dovish divergence may be limited.
– The Euro may continue to benefit from relative political stability, easing energy concerns, and steady GDP forecasts.
– **Watch Levels:**
– A sustained move above 1.4900 could open the door for a test of the psychological 1.5000 handle.
– On the downside, a drop below 1.4700 would invalidate this bullish breakout and suggest consolidation.
## GBP/CAD: Bullish Reversal Pattern Forming
After consolidating through much of the spring, the GBP/CAD pair seems poised for another leg higher, driven by a breakout from a bullish continuation pattern.
– **Technical Observations:**
– GBP/CAD has been trading in a broad ascending triangle since 2023.
– The
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