USDJPY, USDCAD, GBPUSD

US CPI data --> USDJPY

The US CPI figure for February is anticipated to show a slight decrease in annual inflation to 2.9%, down from 3% in January. Month-on-month, prices are expected to rise by 0.3%, lower than the 0.5% increase in January. This data will be crucial for the Federal Reserve as it evaluates whether to pause or continue with interest rate cuts. 

USDJPY is tumbling near its previous five-month low of 146.93, having lost more than 7% since it peaked at 158.86. The downside pressure continues with the next immediate support region coming from 146.50 to 147.15. Even lower, the 141.60 barrier may attract traders’ attention, taken from the bottom on September 30. On the other hand, a successful rally beyond 148.60 could take the bulls up to the 20-day simple moving average (SMA) at 150.00 ahead of the short-term downtrend line at 151.15.

BoC interest rate decision --> USDCAD

On Sunday, the official results revealed that former central banker Mark Carney had emerged victorious in the race to become the leader of the Liberal Party, which currently governs Canada. Carney will succeed Justin Trudeau as prime minister.

Carney will assume the position during a period of turmoil in Canada, which is currently engaged in a trade conflict with its long-standing ally, the United States, under President Donald Trump. It is also required to conduct a general election in the near future.

The Bank of Canada is scheduled to announce its interest rate decision on Wednesday. Given the recent economic conditions and the impact of tariffs, experts are predicting a possible rate cut of 0.25%, bringing the key interest rate down to 2.75%.

USDCAD has been developing within the 23.6% (1.4465) and 38.2% (1.4270) Fibonacci retracement levels of the upleg from 1.3420 to 1.4792, rising above the short-term SMAs. The current outlook is neutral unless there is a climb above the previous peak of 1.4792 or a drop below the two-month low of 1.4150 and, more importantly, below the 200-day SMA at 1.3625.

UK GDP data --> GBPUSD

On Friday, the UK will release its January GDP data. Economists are expecting a modest growth of 0.1% for January, following a growth rate in December 2024 of 0.4%. This would indicate a continued, albeit slow, recovery in the UK economy.

GBPUSD has found strong resistance near the upper Bollinger band after it hit a four-month high at 1.2945 earlier today. First support could come from the 1.2815-1.2840 levels ahead of the flat 200-day SMA at 1.2790. A drop lower could open the door for steeper decreases until the 1.2730 line and the mid-level of the Bollinger band at 1.2690. On the flip side, a move above today’s high could signal more upside movements towards 1.3045-1.3100.