Uncle Sam is printing inflation numbers today while the Bank of Canada will share its latest policy decisions.

How will today’s events affect USD/CAD?

Before we talk setups, lemme show you the major headlines in the previous trading sessions:

  • RBA’s Lowe pushes back against market, sending yields lower
  • Australia consumer confidence improves in March – Westpac
  • China’s inflation rate jumps to highest reading since November 2018
  • China’s February factory prices grow at fastest pace since 2018 as exports rise
  • French industrial output blasts by expectations in January
  • Asian stocks bounce off two-month low as bonds, China markets steady
  • Oil slips for third session before U.S. inventories EIA data
  • Dollar claws back losses as U.S. yields stabilize

Upcoming Potential Catalysts on the Economic Calendar:

  • U.S. CPI numbers at 1:30 pm GMT
  • BOC’s policy statement at 3:00 pm GMT
  • U.S. crude oil inventories at 3:30 pm GMT
  • Federal budget balance at 7:00 pm GMT

What to Watch: USD/CAD

USD/CAD 1-hour Forex Chart

USD/CAD 1-hour Forex Chart

USD/CAD just turned lower from a 1-hour trend line resistance and it looks set to stay inside a descending triangle.

But today’s top-tier events can throw a wrench into the technical geeks’ setups.

See, the U.S. is about to print its February inflation numbers. If consumer prices climb faster than what markets are expecting, then investors could go back to worrying that the Fed might tighten its policies sooner than expected. This could derail economic recovery and drive traders into the safe-haven dollar.

Meanwhile, the Bank of Canada (BOC) is publishing March decisions. While we’re not expecting any policy change, members could become more optimistic over Canada’s growth. This could improve CAD demand across the board.

A non-event CPI release in the U.S., higher oil prices, or optimism from the BOC could extend USD/CAD’s current dip and drag the pair back do the 1.2600 support.

But if traders pay more attention to rising U.S. Treasury yields, or if the BOC is more cautious on Canada’s growth than what analysts had expected, then USD/CAD could break its trend line resistance to retest the 1.2740 February highs.