Dollar Correction: Market Focus on US Inflation Data and Bank of Canada Meeting

The US dollar is trading with mixed dynamics. It is strengthening against commodity currencies, while suffering significant losses against the yen and European currencies. Today, US inflation data is expected, which could provide further clues on the future direction of major currency pairs.

USD/CAD

Investors and market participants have likely stopped paying attention to Donald Trump's threats of tariffs on Canadian goods. Initially, the tariffs were set to be introduced in February, then postponed to early March, and later to April. In response, the Canadian government announced counter-tariffs and a boycott of certain US goods. As a result of these conflicting developments, the USD/CAD pair remains within a medium-term trading range between 1.4500 and 1.4300.

Technical analysis of USD/CAD suggests a potential retest of the lower boundary at 1.4300, as a bearish "doji" pattern was formed yesterday.
If buyers manage to consolidate above 1.4500, the pair could continue its upward movement towards recent highs around 1.4730–1.4600.

Today's key events affecting USD/CAD pricing:

16:30 (GMT+2) – US Crude Oil Inventories
16:45 (GMT+2) – Bank of Canada Interest Rate Decision
17:30 (GMT+2) – Bank of Canada Press Conference

USD/JPY

The decline of the USD/JPY pair halted after a retest of the key support level at 146.50. Yesterday, buyers formed a "bullish engulfing" pattern on the daily timeframe and tested the strategic level of 148.00. If this pattern plays out and the price consolidates above 148.00, a corrective rise towards 150.00–149.00 could follow.

A break below the 146.00 support level may trigger a renewed downtrend towards last year's September lows at 144.80–143.50.

Today's key events affecting USD/JPY pricing:

15:30 (GMT+2) – US Consumer Price Index (CPI)
20:00 (GMT+2) – US 10-Year Treasury Note Auction
21:00 (GMT+2) – US Federal Budget Report