USD/CAD Forecast: Bullish Momentum Continues On Dovish BoC

The USD/CAD forecast shows a solid uptrend as the Canadian dollar extends declines, driven by increased expectations for BoC rate cuts. Additionally, the loonie remains weak due to falling oil prices.The Canadian dollar had a bearish week after the Bank of Canada implemented its second rate cut on Wednesday. Moreover, the central bank indicated that there would be more cuts if inflation continued easing. Analysts believe Canada’s central bank is now focused on spurring growth. Notably, high rates have hurt demand in Canada’s economy. As a result, there is a lot of pressure to lower borrowing costs and support the economy. Consequently, investors are pricing a 70% chance that the BoC will cut rates in September. At the same time, oil prices fell last week, hurting Canada’s commodity currency. Due to China’s weak economy, demand concerns were the primary catalyst for this move. Furthermore, Israel and Hamas made steps towards a ceasefire that would reduce the risk of escalation in the war.Meanwhile, data on Friday showed US inflation increasing modestly, which aligns with forecasts. As a result, there was little impact on Fed rate cut expectations. Markets still expect the first rate cut in September. However, when policymakers meet this week, they might call for caution since the economy remains robust. Still, they might signal a more dovish outlook since inflation is progressing to the 2% target. USD/CAD key events todayInvestors do not expect high-impact economic reports from the US or Canada today. Therefore, the pair might extend last week’s rally. USD/CAD technical forecast: Double top and bearish divergence USD/CAD 4-hour chart On the technical side, the USD/CAD price has slowed down near the 1.3850 key level. However, the bullish bias remains intact, with the price above the 30-SMA and the RSI above 50. The uptrend has continued for a long time without pullbacks to retest the SMA. Therefore, bulls must be exhausted. As a result, bears have started making strong candles below the 1.3850 level. At the same time, the price has made a double top with a bearish RSI divergence, indicating fading momentum that could lead to a bearish reversal. However, the bullish trend will continue if the price breaks above 1.3850.More By This Author:GBP/USD Weekly Forecast: Expecting A Dovish BoE Path AheadUSD/JPY Outlook: Yen Retreats From 2-Month Top After US GDPEUR/USD Forecast: Bears Intensify After Downbeat EU PMI