USD/CAD plunges to 1.3550 after BoC holds rates steady

USD/CAD tumbled 0.9% to 1.3550 following the Bank of Canada's decision to maintain interest rates at 4.25%, defying market expectations for a 25 basis point cut. The hawkish pause boosted the Canadian dollar as Governor Macklem cited persistent inflation concerns and robust labor market conditions. Canada's unemployment rate remained at 6.1%, while core inflation measures showed stickiness above the 2% target. Meanwhile, disappointing US jobless claims at 235K versus 220K expected added pressure on the greenback. Technical indicators point to further downside, with USD/CAD breaking below the crucial 1.3600 support and the 200-day moving average at 1.3575. The next support zone lies at 1.3500-1.3520, while resistance has formed at the broken 1.3600 level. The interest rate differential narrowing between the Fed and BoC continues to favor Canadian dollar strength.