The Canadian Dollar (Loonie) has been trading in a consolidation phase, struggling to establish a decisive breakout. With upcoming Federal Reserve announcements in the U.S. and inflation data from Canada, could these key economic events provide the catalyst needed for a breakout in CAD movement? 

FOMC outlook: Wednesday 19 March 2025 

The Federal Reserve is expected to hold rates steady at 4.25%-4.50%, with market focus on the Summary of Economic Projections (SEP)-the Fed’s quarterly outlook on GDP growth, unemployment, inflation, and interest rates, which will offer critical insight into policymakers’ stance on future rate adjustments. 

Uncertainty remains on the pace and timing of rate cuts in 2025, with expectations ranging from two to three cuts, likely starting in June or July. 

Meanwhile, Fed funds futures price in 100 basis points of cuts by December 2026, signaling a gradual shift in monetary policy. Markets will closely watch Fed guidance for its impact on the U.S. Dollar and risk assets. 

Key US and Canadian Data Releases to Watch This Week 

In the US, key economic reports include Monday’s retail sales data, Tuesday’s housing starts and permits, and Thursday’s jobless claims. Markets remain highly sensitive to signs of economic weakness, meaning a downside surprise could weigh heavily on the US Dollar. 

In Canada, Tuesday’s inflation report, Thursday’s PPI release, and Friday’s retail sales data will be in focus. However, their impact may be softened by tariff uncertainty and the recent tax holiday. Traders will pay close attention to core inflation, which reflects underlying price trends. Additionally, Friday’s house price data will be monitored for signs of recovery following recent Bank of Canada easing measures. 

USDCAD outlook:  

USD/CAD is currently positioned at a key technical level, struggling against downtrend resistance established from the January highs. This level has been well-respected by traders, making it a crucial point for near-term price action. 

Bearish Outlook  

• Recent weakness above 1.4500 suggests downside risks, particularly as bullish momentum fades. 
• A confirmed break below minor support (MS) could indicate potential for downside movement, which some traders may interpret as a bearish signal. 
• Key downside targets include 1.4270, which has acted as both support and resistance over the past three months, followed by the February swing low at 1.4150, with additional levels at 1.4100 and 1.4000. 

Bullish Scenario  

• A break and close above the January 2025 downtrend would challenge the current bearish structure. 
• This move may shift sentiment toward further gains, with previous highs offering potential resistance levels. 

With USD/CAD trapped between these critical levels, traders should wait for a clear breakout or breakdown confirmation before committing to a directional trade.  

AUTHOR

Jamie Dutta >

Jamie Dutta is a Market Analyst for Vantage. He comes with extensive experience as a full-time trader and financial market commentator, having worked as a trader in top tier investment banks and trading houses.