Canadian Dollar Price Action Setups Into CPI: USD/CAD, GBP/CAD, EUR/CAD

The Canadian dollar enters a pivotal week as traders position for the Bank of Canada’s (BoC) upcoming rate decision on October 29. With inflation data due today, markets are watching whether price pressures will justify another rate cut or force policymakers to stay patient. Meanwhile, key CAD crosses — USD/CAD, GBP/CAD, and EUR/CAD — are testing important resistance and support levels, setting up potential volatility around the CPI release.

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Bank of Canada Business Outlook Shows Softer Sales Expectations

Business conditions rose for a fourth straight month to a nine-month high of 19%, according to the Bank of Canada’s quarterly Business Outlook Survey. However, the report noted that “firms’ outlooks and intentions remain subdued.” Uncertainty remains elevated, cost pressures have increased for a second consecutive quarter, and sales expectations over the next 12 months contracted for the first time in 10 months to -2.

Chart prepared by Matt Simpson, data source: Statistics Canada, BOC, LSEG

Inflation in Focus Ahead of Next Week’s Bank of Canada Decision

The Bank of Canada (BoC) will announce its next interest rate decision on October 29, making today’s inflation report a key event for Canadian dollar traders. Despite inflation falling within the BoC’s 1–3% target band earlier this year, core measures have since trended higher, with the weighted median exceeding the upper range three times since April and the trimmed mean twice.

Still, with a slowing economy and weaker business sentiment, there’s optimism that inflation could ease — though tariff risks from a revived Trump agenda remain a wild card. The 1-month OIS currently implies a 48% chance of a 25bp rate cut to 2.25%, while the 6-month OIS has fully priced in a 25bp cut.

BoC Governor Tiff Macklem recently emphasised the need to focus on “the risks” surrounding the next policy move, citing persistent uncertainty and urging humility in forecasts. GDP is expected to recover modestly after contracting 1.6% in Q2, but a strong rebound is unlikely in the near term.

Chart prepared by Matt Simpson, data source: Statistics Canada, LSEG

USD/CAD Technical Analysis: US Dollar vs Canadian Dollar

The US dollar (USD) reached a six-month high against the Canadian dollar (CAD) last week, although bullish momentum is starting to fade on the weekly chart, with a bearish hammer forming just above the 1.40 handle. That said, the daily chart remains within an established uptrend, even if short-term momentum is beginning to soften.

The 1.40–1.4010 area, marked by the monthly R1 pivot, appears to be a key inflection zone for both bulls and bears. If the 1.40 support level holds, bulls could target a move toward 1.41, near the monthly R2 pivot (1.4105). However, a break below 1.40 would expose downside potential toward the 1.3948 high-volume node (HVN) and the 20-day EMA.

Chart analysis by Matt Simpson - data source: TradingView USD/CAD

GBP/CAD Technical Analysis: British Pound vs Canadian Dollar

The British pound (GBP) has gained around 35% against the Canadian dollar (CAD) since the September 2022 low, maintaining a strong uptrend on the weekly chart. The broader bias remains bullish unless the UK delivers another disappointing Autumn Budget. A series of higher lows on GBP/CAD in recent weeks, supported by the 20-week EMA, underline steady upside momentum — though the daily chart hints at potential short-term pullbacks.

On the daily timeframe, a two-bar bearish reversal pattern (dark cloud cover) has appeared near the monthly R1 pivot and 1.89 handle. Price action is now testing its recent low, suggesting scope for bearish mean reversion. Bears may look to fade rallies within Friday or Monday’s range, eyeing potential retracements toward the 20-day EMA (1.8742), 1.87 handle, 50-day EMA (1.8677), or monthly pivot point (1.8851) before reassessing for a new swing low.

Chart analysis by Matt Simpson - data source: TradingView GBP/CAD

EUR/CAD Technical Analysis: Euro vs Canadian Dollar

A similar technical setup has emerged on EUR/CAD, though the euro (EUR) has maintained a stronger uptrend against the Canadian dollar (CAD) than the British pound this year. In theory, any pullback could be shallower, suggesting bulls may prefer to wait for evidence of a swing low before re-entering long positions, while bears should proceed with caution.

A bearish engulfing candle formed on Monday, with its high aligning precisely with the monthly R1 pivot acting as resistance. Bulls could look for signs of a swing low forming near the monthly pivot (1.6238) and retain a bullish bias while prices remain above the 1.6170 low.

Chart analysis by Matt Simpson - data source: TradingView EUR/CAD

Key Economic Events for Traders (AEDT / GMT+11)

08:45 NZD Trade Report: Exports, Imports, Trade Balance (Sep) (NZD/USD, AUD/NZD, NZD/JPY)

10:45 AUD RBA Assistant Governor Jones Speaks (AUD/USD, AUD/JPY, ASX 200)

12:00 EUR German Buba President Nagel Speaks (EUR/USD, EUR/GBP, DAX)

13:00 NZD Credit Card Spending (Sep) (NZD/USD, AUD/NZD, NZD/JPY)

15:00 EUR German Buba President Nagel Speaks (EUR/USD, EUR/GBP, DAX)

17:00 GBP Public Sector Borrowing and Cash Requirement (Sep) (GBP/USD, EUR/GBP, FTSE 100)

17:00 CHF Trade Balance (Sep) (USD/CHF, EUR/CHF, SMI Index)

18:00 CHF M3 Money Supply (Sep) (USD/CHF, EUR/CHF, SMI Index)

18:00 EUR ECB’s Lane Speaks (EUR/USD, EUR/GBP, DAX)

21:30 GBP BoE Governor Bailey Speaks (GBP/USD, EUR/GBP, FTSE 100)

22:00 EUR ECB President Lagarde Speaks (EUR/USD, EUR/GBP, DAX)

23:30 CAD CPI Report: Headline, Core, Common, Median, Trimmed (Sep) (USD/CAD, EUR/CAD, CAD/JPY)

23:55 USD Redbook (S&P 500, Nasdaq 100, USD/JPY)

00:00 USD Fed Waller Speaks (S&P 500, Nasdaq 100, USD/JPY)

02:00 NZD Global Dairy Trade Price Index (NZD/USD, AUD/NZD, NZD/JPY)

02:00 USD Milk Auctions (S&P 500, Nasdaq 100, USD/JPY)

04:00 EUR German Buba Balz Speaks (EUR/USD, EUR/GBP, DAX)

06:30 USD Fed Waller Speaks (S&P 500, Nasdaq 100, USD/JPY)

07:30 USD API Weekly Crude Oil Stock (WTI Crude, Brent Crude, USD/CAD)

View the full economic calendar

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

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