USD/CAD Holds 1.4350 as BoC Pauses on Tariff, Inflation Concerns

USD/CAD consolidated around 1.4350 following the Bank of Canada's decision to maintain rates, citing persistent inflation concerns and potential US tariff threats under the Trump administration. The pause breaks the BoC's recent easing cycle, which had seen 175 basis points of cuts since June 2024, supporting the Canadian dollar despite ongoing economic headwinds. Markets had priced in a 15% probability of a cut, making the hold slightly hawkish for CAD. Governor Macklem emphasized monitoring core inflation metrics, currently running at 2.7% year-over-year, above the 2% target. The looming threat of US tariffs on Canadian exports adds another layer of uncertainty, potentially limiting BoC's flexibility for future cuts. Technical resistance sits at 1.4400, while support has formed at 1.4300. Traders await Friday's Canadian employment data and US NFP for directional clarity.