The USD/CAD pair weakened slightly below 1.4250 on Tuesday as markets turned cautious ahead of Canada’s upcoming CPI inflation report. Traders anticipate this data will shape the Bank of Canada’s next policy moves, potentially influencing the strength of the Canadian dollar.
Market sentiment remains mixed, with the U.S. dollar holding firm amid global uncertainty. However, traders are hedging their bets on how Canada’s inflation data will fare against forecasts, which could lead to a sharper move in the pair.
If Canadian inflation exceeds expectations, it could bolster the loonie, driving USD/CAD lower. Conversely, weaker-than-expected CPI could further pressure the Canadian dollar, keeping the pair near recent highs.
