CAD Canadian Dollar - Bank of Canada Cuts Rates as Expected by 50 Basis Points, Canadian Dollar Temporarily Halts Decline

According to a Bloomberg report on Thursday, if U.S. President Trump continues to threaten tariffs, Canada is considering imposing export taxes on major commodities exported to the U.S., including uranium, oil, and potash. The report cited officials familiar with discussions within Canadian Prime Minister Trudeau's government, stating that export taxes would be Canada's last resort, with retaliatory tariffs on U.S. goods and export controls on certain Canadian products being more likely options.

The USD/CAD pair rose to a high of 1.4194 on Tuesday since April 2020 before retracing, touching a peak at 1.4193 on Wednesday. As seen in the technical charts, both the RSI and stochastic indicators are rebounding from oversold territory, suggesting a potential adjustment in the exchange rate before reaching the 1.42 level in the short term. Support levels are seen at 1.41 and 1.40, with the next level expected at 1.3920. A key support lies at 1.4050, extending from the upward trend line since September, and near the 25-day moving average at 1.4035. In the recent upward trend over the past two months, multiple adjustments have held above the 25-day moving average and even maintained the 1.40 level. Hence, caution is advised as a break below this area could potentially reverse the trend of the USD/CAD pair, with further support levels at 1.39 and 1.3810. Resistance levels are anticipated at 1.4350 and 1.45.

Forecast range:
Resistance: 1.4200 - 1.4350 - 1.4500
Support: 1.4100 - 1.4000 - 1.3920 - 1.3810

Highlights of the week:
December 11th
Bank of Canada announces a rate cut of 50 basis points to 3.25%
The Bank of Canada states it will assess the need for further rate cuts on a case-by-case basis

December 12th
Canada considers imposing export taxes on commodities such as uranium and oil if Trump instigates a trade war

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