USD/CAD Surges Ahead of BoC Survey – 20 January 2025

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As we head into Monday, January 20, 2025, global markets are gearing up for a new trading week, with a key focus on significant U.S. economic events, including housing data and the Bank of Canada’s Business Outlook Survey. The U.S. dollar continues to dominate market attention as traders analyze last week’s data and brace for upcoming releases, particularly related to inflation and consumer sentiment.

In the currency markets, NZD/USD, USD/CAD, and USD/JPY showcased notable movements, reflecting broader market trends and event-driven volatility. While traders monitor global risk sentiment, the economic calendar remains loaded with high-impact events that could set the tone for the week ahead.

NZD/USD

Technicals in Focus

The NZD/USD pair experienced heightened volatility, retreating toward the 0.5580 level after showing some initial gains earlier in the week. The New Zealand dollar faced pressure from weaker risk sentiment as market participants braced for upcoming U.S. economic data. The drop coincided with lower demand for risk-sensitive currencies amid concerns about global growth.

  • MACD: Hovering below the zero line, signaling persistent bearish momentum.
  • Stochastic Oscillator: In oversold territory, indicating potential for a corrective bounce.
  • 14-Day RSI: Reflecting weak momentum, staying below neutral levels.

Trading Strategy: Neutral to Sell

  • Sell below 0.5600-0.5580 with targets at 0.5550-0.5530, with stops above 0.5630.
  • Alternatively, buy above 0.5630 with targets at 0.5660-0.5690, with stops below 0.5580.

USD/CAD

Technicals in Focus

The USD/CAD pair surged to 1.4478, reflecting strong momentum from a rally driven by weaker Canadian retail sales data and a stronger U.S. dollar. The pair’s movements were further influenced by positioning ahead of Monday’s Bank of Canada Business Outlook Survey, with traders closely monitoring the central bank’s outlook on growth and inflation.

  • MACD: Firmly in bullish territory, suggesting upward momentum.
  • Stochastic Oscillator: Near overbought levels, signaling potential resistance near 1.4500.
  • 14-Day RSI: Approaching overbought conditions, reflecting strong upward momentum.

Trading Strategy: Neutral to Buy

  • Buy above 1.4450-1.4470 with targets at 1.4500-1.4530, with stops below 1.4420.
  • Alternatively, sell below 1.4420 with targets at 1.4380-1.4350, with stops above 1.4470.

USD/JPY

Technicals in Focus

The USD/JPY pair climbed to the 156.25 level, reflecting strength in the U.S. dollar amid robust market sentiment and higher yields on U.S. Treasuries. Last week’s positive U.S. labor market data continued to provide support, while traders now turn their attention to the Bank of Japan’s monetary policy statement and interest rate decision later this week.

  • MACD: Strongly bullish, signaling continued upward pressure.
  • Stochastic Oscillator: Near overbought territory, suggesting possible consolidation.
  • 14-Day RSI: Reflecting solid momentum as the pair tests resistance near recent highs.

Trading Strategy: Neutral to Buy

  • Buy above 156.00-156.30 with targets at 156.60-157.00, with stops below 155.70.
  • Alternatively, sell below 155.70 with targets at 155.30-155.00, with stops above 156.30.

Market Outlook

Looking ahead, traders will closely monitor U.S. existing home sales and consumer sentiment data for further insights into economic resilience and inflationary pressures. The Bank of Canada’s Business Outlook Survey on Monday will also play a critical role in shaping USD/CAD movements, particularly given its implications for future rate decisions.

Additionally, Wednesday’s U.S. Leading Index and the ECB President’s speech could introduce further volatility across major pairs, particularly in light of last week’s mixed data from the Eurozone and the U.S. Overall, the week is set to remain data-driven, with heightened sensitivity to inflationary and growth-related indicators.

Global markets are poised for potential shifts as traders digest new information and recalibrate expectations.

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