USD/CAD

The BoC's unchanged rate at 2.25% combined with Canada's surprise CPI undershoot has removed a near-term hawkish catalyst for the CAD, allowing USDCAD to rebound from 1.4000, but persistent USD softness and oil above $85 mean the pair is unlikely to sustain a rally above 1.4200.

USDCAD is caught in a tug-of-war at 1.4100: the BoC's hold at 2.25% and Canada's cooler-than-expected June CPI (2.8%) have pulled the pair back from the 1.4000 psychological low, while elevated oil prices at $85.20 and broad USD weakness keep the topside capped near the 1.4150 50-day MA zone.

Main Risk

Bank of Canada dovish pivot risk on 2.8% CPI undershoot

If the BoC signals readiness to cut from 2.25% at its next meeting, USDCAD could accelerate through 1.4150 resistance toward the 1.4300 area.