Key Takeaways
Bank of Canada expected to hold rates at 2.25%, maintaining a steady easing path after multiple cuts since mid-2024.
USDCAD sits right on the pivotal 50% retracement (1.38394) after a sharp jobs-driven selloff and a two-day rebound.
Midpoint level sets a perfect launch point: dovish BoC = upside toward major MAs; hawkish tone = downside back toward Monday’s lows.
BoC Decision Overview
The Bank of Canada will announce its interest rate decision at 9:45 AM ET, with markets widely expecting no change, keeping the policy rate at 2.25%. After peaking at 5%, the BoC has steadily reduced rates since its first cut in June 2024, including a 25-bp cut at the October meeting.
Giuseppe provided a strong fundamental preview earlier today (link in original post), while the focus here is on the technical roadmap for USDCAD heading into the announcement.
Why USDCAD Is at a Critical Decision Point
Last Friday’s much stronger-than-expected Canadian jobs report — the second consecutive upside surprise — triggered a sharp selloff in USDCAD. The pair broke below:
the 100-day moving average
the 200-day moving average
and the 50% midpoint of the June–November rise at 1.38394
The downside accelerated to 1.3798, just under the 1.3800 natural support.
Over the last two sessions, however, USDCAD has rebounded higher, reclaiming the key 50% level. The pair now trades just above 1.38394, making that midpoint the ideal inflection point heading into the decision.
How to Trade the Midpoint Going Into the BoC
The 50% retracement level (1.38394) acts as the neutral fulcrum.
From here:
If the BoC is more dovish:
USDCAD should rotate higher, with upside targets at:
1.3870 – 100-hour MA (first and most important break; price has failed here on the last three corrections)
1.3882 – 200-day MA
1.3909 – 100-day MA
A move above the 100-hour MA is step one toward re-establishing a bullish bias.
If the BoC is more hawkish:
The midpoint breaks back to the downside, exposing:
1.3798 – Monday’s low
1.3768 – 61.8% retracement
1.3720–1.37257 – key swing area from the August/September lows
Momentum should accelerate if 1.3798 gives way.
Final Thoughts
USDCAD is perfectly balanced heading into the BoC announcement, with the 50% midpoint serving as a clean technical staging ground. A dovish or hawkish surprise will determine whether the pair rotates back toward its major long-term moving averages or retests the recent cycle lows.
The video above walks through these levels visually and explains why this setup is unusually well-defined for a central bank day.
