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Brown Brothers Harriman (BBH) analyst Elias Haddad noted that the USD/CAD pair fell below 1.3700 ahead of Canada’s February CPI data release. Market consensus anticipates a decline in headline inflation due to base effects, with core inflation remaining near 2%. This aligns with the Bank of Canada’s (BOC) recent policy of maintaining stable interest rates amid moderate inflationary pressures. The USD/CAD pair is sensitive to Canadian inflation data, as it influences the BOC’s monetary policy decisions. A weaker-than-expected CPI report could delay rate hikes, supporting the Canadian dollar. Conversely, stronger inflation might prompt tighter monetary policy, weakening CAD. Traders are closely monitoring the February CPI release for clues about the BOC’s next move. For forex markets, the key focus is on whether the BOC will maintain its current rate trajectory or adjust policy based on incoming data. Investors should watch the February CPI report (scheduled for March) and subsequent BOC statements. Technical levels around 1.3700 could act as a near-term support/resistance zone for USD/CAD.
