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Bulls Await Re-Entry at Key Moving Average as Rally Consolidates
Central Bank
Economic
Summary:
This immediate reclamation of the 200-MA strongly suggests that bulls are interested in defending and controlling the price from this level.
Buy
PENDINGUSDCAD
EXP
1.39400
Entry Price
1.40300
TP
1.38900
SL
1.40541 +0.00500 +0.36%
--
Point
PENDING
1.38900
SL
CLOSING
1.39400
Entry Price
1.40300
TP
Major geopolitical events are easing global tensions. Earlier on Thursday, U.S. President Donald Trump and Chinese President Xi Jinping concluded talks during the APEC summit in South Korea. The two leaders formalized a one-year trade truce, which involves the U.S. lowering tariffs on Chinese goods from roughly 57% to 47%. In exchange, China committed to resuming purchases of U.S. soybeans. Trump also stated that China agreed to ensure the "flow of rare earths, critical minerals, magnets, etc., openly and freely."
The U.S. central bank, meanwhile, delivered a widely anticipated 25 bps reduction in the federal funds rate, setting the new target range at 3.75%-4.00%. The decision was not unanimous, with Governor Stephen Miran arguing for a deeper 50 bps cut and Kansas City Fed President Jeffrey Schmid preferring to hold rates steady.
In its Monetary Policy Statement, the Federal Reserve acknowledged that economic activity is expanding at a moderate pace, but job gains have slowed, and inflation remains elevated. Policymakers admitted that uncertainty surrounding the outlook is high, and downside risks to employment have increased. Notably, the Committee announced plans to end Quantitative Tightening (QT) by halting the reduction of its securities holdings on December 1st, effectively signaling a pause in balance sheet contraction. Fed Chair Jerome Powell noted the ongoing tension between fighting inflation and supporting employment, suggesting the policy rate is now within the range of many neutral estimates. He also highlighted a "growing chorus" within the Committee advocating for patience before making another move.
The Bank of Canada (BoC) Governor, Tiff Macklem, issued a surprisingly hawkish assessment after the bank's recent rate cut. Macklem stated that the policy rate is now "roughly at the right level if inflation and activity evolve as projected," a comment that suggested a stronger outlook than implied by the easing. The BoC maintains its forecast for inflation to stabilize around 2%, although it revised its GDP projections for 2025 and 2026 slightly downward.
Macklem emphasized that the Canadian economy continues to grapple with significant headwinds, largely due to restrictive U.S. trade policy and sluggish global demand. He stressed the limits of monetary policy in stimulating demand while tariffs continue to damage key sectors like automotive and lumber. As a result, the BoC now forecasts that the GDP level will be approximately 1.5% lower by the end of 2026 compared to its earlier January projection. The bank also pointed to a weakening labor market, with the unemployment rate climbing to 7.1%.
Technical Analysis
USD/CAD recently executed a sharp bounce from the local low of 1.3887 (reached on October 29th). Following this brief touch, the price reacted strongly to the upside, quickly reclaiming the 200-period Moving Average (MA), which is located at 1.3940. This immediate reclamation of the 200-MA strongly suggests that bulls are interested in defending and controlling the price from this level.
The subsequent rally pushed the price to the 100-period MA at 1.4003, and the pair now appears to be entering a state of consolidation. If this consolidation phase leads to a pullback and the price approaches the 200-period MA once more, it would present a compelling long opportunity for traders to target the local resistance at 1.4034.
Currently, the Relative Strength Index (RSI) is at 57, remaining well out of oversold territory. However, the RSI is showing a slightly higher reading compared to previous, higher price levels, signaling a subtle divergence in the bullish momentum. This divergence indicates that a slight downward consolidation or pullback is likely before the next significant upward impulse can occur. Conversely, if the price breaks and closes decisively below the 200-period MA (1.3940), the current bullish setup would be invalidated.
Trading Recommendations
Trading direction: Buy
Entry price: 1.3940
Target price: 1.4030
Stop loss: 1.3890
Validity: Nov 11, 2025 15:00:00
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