Canadian Dollar is one of the month’s top performers as markets grow increasingly confident that the BoC has concluded its easing cycle and entered a prolonged pause. Expectations for a steady hold tomorrow are well-priced, and confirmation from Governor Tiff Macklem could open additional upside for Loonie, particularly in crosses.
The central bank is widely expected to leave rates unchanged after nine cuts over the past 17 months. Macklem signaled in late October that policymakers may be done reducing rates after lowering the policy rate to 2.25%. While the bank continues to stress that the economy is undergoing a “difficult transition” due to structural damage from the U.S. trade conflict, it has also noted that monetary policy has limited room to stimulate demand while keeping inflation anchored.
Incoming data since then have strengthened the case for a hold. Q3 GDP grew at a 2.6% annualized pace versus the BoC’s projection of 0.5%. Employment rose by 54k in November, extending the steady gains seen in September and October. Underlying inflation remains above the 2% target and risks proving stickier than the bank would prefer. These developments reinforce the conclusion that the easing cycle has run its course.
Markets will focus on whether Macklem explicitly affirms this long-pause stance in the statement and press conference. Clear communication on this front could further underpin CAD strength into early 2026.
Technically, EUR/CAD’s fall from 1.6456 resumed by breaking through 1.6138 support last week. Considering bearish divergence condition in D MACD, the decline is likely correcting the whole rise from 1.4483. Further fall is expected as long as 55 4H EMA (now at 1.6201) holds. Next target is 100% projection of 1.6465 to 1.6138 from 1.6317 at 1.5990.
Decisive break there will solidify this near term bearish case and bring downside acceleration to 161.8% projection at 1.5788 next.
Nevertheless, in the picture, strong support is likely to be seen between 38.2% retracement of 1.4483 to 1.6465 at 1.5708 and 55 W EMA (now at 1.5780) to contain downside and bring rebound.
 holds. Next target is 100% projection of 1.6465 to 1.6138 from 1.6317 at 1.5990.){kind=link}