USD/CAD rallies as weak Canadian CPI boosts BoC rate cut expectations

USD/CAD has strengthened following softer-than-expected Canadian inflation data, increasing market expectations for Bank of Canada rate cuts. The weak CPI figures reinforce the divergence between Canadian and US monetary policy outlooks, with the BoC likely to maintain a more dovish stance compared to the Federal Reserve. While specific inflation numbers weren't provided, the data was sufficiently weak to shift market pricing for future BoC decisions. The Canadian dollar's weakness reflects growing concerns about economic slowdown and the central bank's potential response. Technical momentum favors further USD/CAD upside, with traders eyeing key resistance levels as rate differential expectations widen. The pair's movement also reflects broader commodity currency weakness, as softer economic data typically correlates with reduced demand for resource exports. Near-term direction will depend on upcoming Canadian economic releases and any shifts in Federal Reserve policy expectations.