USD Rebounds: What’s Next for EURUSD & USDCAD?
By Razan Hilal, CMT, Market Analyst – 5:59 AM, 3/21/2025
Key Points:
- Canadian Retail Sales report is on the horizon.
- Upcoming EUR and US Flash Manufacturing and Services PMI data could create volatility.
- Track developments in the ongoing trade wars.
EURUSD Outlook
In the wake of prolonged US Dollar Index weakness, a significant shift occurred during the recent FOMC meeting, driving EURUSD down nearly 140 points from its late November highs of 1.0954 down to a low of 1.0814, where it found fresh support. The impending PMI data release on Monday poses volatility risks, especially against a backdrop of heightened tariff-related worries.
Although manufacturing PMIs indicate potential contraction (< 50), the services PMIs remain above this threshold. Traders are keenly awaiting February's figures to gauge overall sentiment.
USDCAD Outlook
The Bank of Canada's recent rate cut has led to surprising CPI data, with m/m rising to 1.1% and y/y climbing to 2.9%. This rise amid inflationary concerns forces the BOC to adopt a flexible policy framework while avoiding rigid forward guidance until economic conditions stabilize.
Technical Analysis: Quantifying Uncertainties
The EURUSD daily forecast shows momentum reversing as it held above critical support. A potential breaching of 1.0790 could lead to sharper retracement towards 1.0730 or lower. On the contrary, a rebound pushes the pair back toward 1.0950, seeking subsequent resistance at 1.1040.
For USDCAD, the resistance lies between 1.4490 and 1.4540. A decisive break could signal bullish momentum, while falling below 1.4260 would indicate a deeper retracement.
Summary and Conclusion
The USD's oscillation against both EUR and CAD necessitates a vigilant watch on both macroeconomic indicators and geopolitical developments. The market does seem to be at a crossroads, and traders should prepare for potential volatility as critical data releases loom.
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