The USDCAD is little changed in up and down trading to start the new trading week.
BoC Decision: Last week the BOC held rate at 2.25% as resilience replace recession fears
Last week, in its final policy decision of 2025, the Bank of Canada (BoC) opted to hold its overnight rate steady at 2.25%, signaling a pause in its easing cycle after cuts earlier in the fall.
BOC Macklem noted that despite global uncertainties and the headwinds from U.S. tariffs, the Canadian economy has proven surprisingly resilient, with stronger-than-expected GDP growth and labor market improvements. With headline inflation stabilizing near the 2% target—though underlying price pressures remain slightly elevated—the Bank deemed the current policy stance appropriate as long as the economy evolves as projected.
Emphasizing a data-dependent approach for future decisions, the BoC’s stance has led markets to anticipate a prolonged hold, with analysts even pricing in a modest risk of a rate hike in 2026 should inflation re-accelerate.
Canada CPI (Nov 2025): Inflation Holds Steady at 2.2% as Core Cools, but Grocery Bills Spike
Today, Canada’s inflation report for November came in slightly softer than anticipated, with headline CPI holding steady at 2.2% year-over-year (below the 2.3% expectation). The data provided reassurance for the Bank of Canada as underlying pressures eased; both CPI median and trim slowed to 2.8%, while the monthly BoC core reading actually turned negative (-0.1%). While the "all-items" index was helped by lower costs for travel, accommodation, and slower rent growth, Canadian households are facing renewed shock at the grocery store. Food inflation accelerated to 4.7%—the highest rate since December 2023—driven by severe price spikes in coffee (+27.8%) and frozen beef (+17.7%). Overall, the benign monthly figures support the central bank's view that broad inflationary pressures remain contained.
USDCAD remains technically biased lower as sellers continue to control rallies
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. That failure marked an important turning point, as the price has since worked progressively lower, eventually reaching a new cycle low at 1.3747 today. The sequence of lower highs and lower lows underscores that sellers remain firmly in control of the broader short-term trend.
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. Those repeated rejections not only reinforce the bearish bias, but also elevate the moving average into a clear risk-defining level for both buyers and sellers.
The most recent up-and-down price action from last week fits neatly within this technical framework. Buyers were able to generate a modest bounce, but momentum quickly faded once the 100-hour MA came into view, allowing sellers to reassert control and drive the pair to fresh lows.
As long as the price remains below that declining moving average, rallies are likely to be viewed as selling opportunities rather than trend reversals.
In the video above, I (Greg Michalowski, author of Attacking Currency Trends), walks through the key technical levels and scenarios shaping USDCAD after last week’s corrective move and renewed downside follow-through.
