USD/CAD faces uncertainty ahead of BOC decision with 26% cut probability

USD/CAD traded in a tight range around 1.4340 ahead of the Bank of Canada rate decision, with markets pricing a 26% chance of a 25bp cut from the current 2.75% rate. The low probability reflects mixed Canadian economic data, with inflation showing signs of persistence while growth remains subdued. Most economists expect the BOC to hold steady today while signaling potential easing at the July 30 meeting. The Canadian dollar has been supported by WTI crude oil holding above $72/barrel and relatively stable risk sentiment. Technical indicators show USD/CAD trapped between 1.4300 support and 1.4380 resistance. A hawkish hold could push the pair toward 1.4300, while any surprise cut would likely propel USD/CAD above 1.4400. Traders are positioning cautiously, with implied volatility rising ahead of the announcement. The decision's forward guidance will be crucial for determining CAD's trajectory through summer 2025.