Bank of Canada Holds at 2.75% with Dovish Tilt, USD/CAD Steady

The Bank of Canada held its overnight rate steady at 2.75% in its latest policy decision, delivering what market participants are interpreting as a dovish-leaning hold. While the rate was left unchanged as widely expected, the accompanying statement and forward guidance suggested the central bank remains open to further easing if economic conditions deteriorate. The Canadian economy continues to face headwinds from softening consumer spending and a cooling housing market, while inflation has moderated closer to the BoC's 2% target. USD/CAD initially rallied on the announcement as the dovish tone weighed on the loonie, with the pair testing the 1.3000 area. Oil prices, a key driver for CAD, remain under pressure amid global demand concerns, providing an additional headwind for the currency. From a technical perspective, USD/CAD faces resistance near 1.3050, while support is established around 1.2950. Traders will now shift focus to upcoming Canadian GDP and employment data for further clarity on the BoC's rate trajectory in subsequent meetings.