Currently, Canada's macroeconomic and financial environment is highly uncertain, with a clear divergence between market expectations, economic fundamentals, and policy assessments. On one hand, financial markets have significantly raised expectations for interest rate hikes within the year. On the other hand, most economists believe rates will most likely remain unchanged. This divergence reflects differing judgments on the inflation trajectory and economic resilience. The market's increased bets on rate hikes stem primarily from concerns over geopolitical risks, particularly how the situation in the Middle East could push up energy prices and trigger another wave of inflationary pressure. Some traders are drawing parallels between the current environment and the post-pandemic inflation cycle, believing that rising energy prices combined with recovering demand could drive overall prices higher again. Based on these expectations, market pricing suggests a potential rate hike as early as July, with a cumulative total of two hikes by October, and even a third hike within the year is possible. However, from an economic fundamentals perspective, Canada currently lacks the strong demand support seen during the post-pandemic period. Latest data shows that first-quarter annualized economic growth may be below 1%, significantly weaker than the central bank's previous forecast of 1.8%, indicating weak economic momentum. At the same time, core inflation is gradually declining and approaching the 2% policy target, which means inflationary pressures have eased structurally.

Based on the 4-hour chart, the Bollinger Bands are expanding upwards, and the moving averages are diverging higher. The price is oscillating upwards between the Bollinger Upper Band and the EMA12, indicating that the short-term upward trend remains intact. The MACD and signal lines are above the zero line and are about to form a death cross, signaling that an adjustment could occur at any time. Support is near the EMA12 and the psychological level, at 1.386 and 1.38, respectively. The RSI value is 78, indicating that market participants are predominantly in buying positions. Daily, the Bollinger Bands are expanding upwards, and the moving averages are diverging upwards. The price has recently reached a previous high resistance level, where significant selling pressure is likely. The RSI value is 71, indicating that the market has entered overbought territory, with a peak divergence in the RSI observed. Therefore, it is recommended to sell at highs.

Trading direction: Sell

Entry Price: 1.39

Target Price: 1.36

Stop Loss: 1.41

Support: 1.36/1.325/1.28

Resistance: 1.4/1.41/1.42