USDCAD under pressure: what will the Fed and the Bank of Canada decide on this historic day

The USDCAD pair is awaiting the Fed and BoC interest rate decisions, with quotes testing the 1.3700 level. Find more details in our analysis for 16 March 2026.

USDCAD forecast: key takeaways

• The market is awaiting the Federal Reserve and Bank of Canada rate decisions
• High oil prices support the CAD
• USDCAD forecast for 16 March 2026: 1.3630

Fundamental analysis

Today’s USDCAD outlook is optimistic for the CAD: after a correction, the pair may continue its downward trajectory, with quotes currently around 1.3700.

The key drivers for the USDCAD pair this week:

• The main event of the week is the Federal Reserve and the Bank of Canada meetings on the same day. This creates a rare setup for a direct comparison of the two central banks’ rhetoric
• The Fed will likely keep the policy rate unchanged at 3.75%, but the market will be looking for hints about the timing of easing. Currently, only one rate cut is expected before the end of the year
• The Bank of Canada is trapped, with its policy rate at 2.25%. On the one hand, inflation pressure from high oil prices calls for caution; on the other hand, weak GDP (a 0.6% year-on-year contraction in Q4) argues for stimulating the economy
• The Canadian dollar is an oil-related currency, and this factor is currently supporting it. Brent prices are hovering above 100 USD amid the closure of the Strait of Hormuz through which more than 20% of global oil flows. However, there is a nuance this week: the IEA announced a record release of 400 million barrels from strategic reserves, which temporarily cooled oil bulls and gave USDCAD some breathing room

This week, the USDCAD pair will be pulled between high oil prices (supportive for the CAD) and broad demand for the US dollar as a safe-haven asset. Wednesday will be the day of truth, with the decisions of the two central banks setting the pair’s direction through the end of the month.

Technical outlook

On the H4 chart, the USDCAD pair formed a Harami reversal pattern near the upper Bollinger Band. At this stage, it may continue a downward wave as the signal plays out. With the price testing the upper boundary of the descending channel, a drop towards the nearest support level at 1.3630 is possible. A breakout below this level would open the potential for the downtrend.

At the same time, the forecast for 16 March 2026 also includes a scenario where the price undergoes a correction towards 1.3770 before resuming the decline.

USDCAD overview

• Asset: USDCAD
• Timeframe: H4 (Intraday)
• Trend: bearish
• Key resistance levels: 1.3770 and 1.3925
• Key support levels: 1.3630 and 1.3550

USDCAD trading scenarios for today

Main scenario (Buy Stop)

A consolidation above 1.3715 would confirm a breakout from the local consolidation and create conditions for a rise towards 1.3925. The risk-to-reward ratio is above 1:8. The upside potential is about 210 pips with a risk of around 25 pips.

• Take Profit: 1.3925
• Stop Loss: 1.3690

Alternative scenario (Sell Stop)

A breakout below the 1.3630 support level would increase selling pressure and open the way to 1.3550. Losing this zone would restore the downtrend formed in early February.

• Take Profit: 1.3550
• Stop Loss: 1.3660

Risk factors

Key factors for the USDCAD pair remain the dynamics of oil and gold, which support the CAD, and expectations for the Bank of Canada’s policy after weak GDP (-0.6% y/y in Q4). Additional pressure or support will depend on USD performance and a reassessment of Fed and BoC rate expectations.

Summary

The CAD continues to try to regain ground ahead of the interest rate decisions. USDCAD technical analysis suggests a decline towards the 1.3630 area.

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