November 2nd chart of the week: USD/CAD technical outlook, central bank policies and NFP in focus

• Central bank policy decisions remain in sharp focus following the BoC’s 25 bps rate hike to 2.50%² and the FOMC’s hold at 3.75%–4.00%⁴, setting up potential market shifts ahead of key RBA and BOE updates¹.
• Near-term USD/CAD volatility hinges on upcoming economic catalysts, including Friday’s dual U.S. Nonfarm Payrolls and Canadian Labor Force Survey reports¹.
• Technical indicators show USD/CAD constrained below the moving averages and the 1.4071 monthly pivot point, with major support near the 200 SMA and the monthly S1 at 1.3844.

Following a week of major central bank decisions, market focus shifts to upcoming interest rate decisions from the Reserve Bank of Australia (RBA) and the Bank of England (BOE)¹. With ongoing inflation and growth concerns driving the policy debate, guidance from the RBA and the BOE can be key to determining borrowing cost trajectories and market sentiment.

Outside of central bank announcements, macroeconomic indicators and external forces are set to drive currency market volatility, placing the USD/CAD pair directly in focus. Although interest rate decisions from central banks such as the RBA and BOE shape overall market sentiment, USD/CAD is particularly responsive to major domestic data releases—specifically U.S. labor market reports like Nonfarm Payrolls and Canadian employment figures, both due this Friday. Additionally, the pair is vulnerable to geopolitical and economic catalysts beyond monetary policy, including U.S. midterm elections, trade and tariff talks, and shifts in global energy prices, creating potential upside and downside risks for both currencies.

On Wednesday, October 28, 2026, the Bank of Canada raised its policy rate by 25 basis points to 2.50%, marking its first rate hike since holding rates steady at 2.25%. This preemptive decision was driven by persistent inflationary pressures—with headline inflation near 3% and projected to remain above target through 2027 due to elevated energy and import costs—alongside a resilient domestic economy, supported by the BOC’s upgraded GDP growth forecasts through 2028².

Market participants are closely watching the upcoming release of Canada’s Labor Force Survey on Friday, November 6, as Statistics Canada provides a fresh reading on the domestic labor market. Following a steep decline of 68,000 jobs in September, with the national unemployment rate rising to 6.5%³, investors and analysts will assess whether the recent weakness was a temporary blip or the start of a broader, more persistent hiring slowdown. A stronger-than-expected rebound in headline job creation and wage growth would help alleviate concerns over domestic economic momentum, whereas another sluggish report could reinforce bets on an increasingly dovish path for the Bank of Canada.

At its meeting on Wednesday, October 28, 2026, the FOMC voted 10–2 to keep the target range for the federal funds rate at 3.75% to 4.00%, with dissenters Cleveland Fed President Beth Hammack and Governor Lisa Cook favoring a 25 basis point hike. The decision to hold rates steady allows policymakers to evaluate the impact of policy lag from prior tightening, with expansion at a “strong pace”, alongside resilient consumer spending⁴.

Furthermore, labor market rebalancing—marked by slower payroll growth of 29,000 jobs in September and a 4.2% unemployment rate⁵—has reduced the urgency of immediate tightening, though ongoing inflation risks (with September Core CPI at 2.6%⁶) mean future adjustments remain possible if price pressures persist.

As of November 1, 2026, CME FedWatch conditional meeting probabilities signal strong market consensus on the federal funds target rate path through late 2027, with investors broadly expecting a 25 bps hike to the 400–425 bps range at the December 9, 2026 FOMC meeting (74.6% probability) versus a 25.4% chance of a rate pause (375–400 bps), while extreme policy actions remain at 0.0%. Looking further ahead, the highest conditional probability gradually shifts toward the 425–450 bps band starting in mid-2027, with market projections fanning out over subsequent meeting dates as macroeconomic uncertainty expands⁷.

• Following a break below the lower border of an ascending channel in February 2025, price action traded within a narrowing formation (Sloping red lines) until June 2026, when it broke above the upper boundary and trended toward the 1.4250 level. In August 2026, USD/CAD completed a throwback to the extended upper trendline, where it found support, followed by an upward gap and a shortfall before extending gains toward 1.4300. However, a negative RSI divergence emerged, sending price lower to test 1.3940.
• Currently, price action trades below its fast EMA9, the intermediate SMA50, the monthly pivot point (1.4071), and the weekly PP(1.3994). These levels collectively act as immediate overhead resistance.
• A confluence of support lies beneath current price levels, defined by the long-term SMA200, weekly S2 at 1.3868, and monthly S1 at 1.3844. This monthly S1 level also aligns with the upward gap and shortfall recorded in August 2026.
• RSI remains aligned with price action; it is presently tracking below its average line and attempting to form a double bottom just above oversold territory, near the 40.00 mark.
• The most recent COT report, published on October 30th, 2026, with data through the close of Tuesday, October 27th, 2026, highlights a negative divergence between price action and asset manager/institutional net positioning across the price peaks of June 2026 and October 2026. While price action recorded higher highs, institutional net positioning dropped across the price peaks from above 110000 to near 30000 contracts⁸.

In summary, USD/CAD sits at a critical juncture where macroeconomic divergence and technical levels intersect. While the BoC’s 25 bps rate hike provides underlying support for the CAD, the FOMC’s decision to hold rates steady leaves overall policy trajectory dependent on incoming data. Immediate volatility may hinge on Friday’s dual U.S. Nonfarm Payrolls and Canadian Labor Force Survey releases. From a technical perspective, price action remains constrained below immediate resistance defined by moving averages and the 1.4071 monthly pivot point, with major ceiling resistance at 1.4300. Conversely, strong downside protection is established near the long-term 200 SMA and monthly S1 support around 1.3844. A decisive breakout beyond these key boundaries will likely dictate the pair’s next directional trend.

Abbreviation list:

RBA: Reserve Bank of Australia

BOC: Bank of Canada

FOMC: Federal Open Market Committee

BOE: Bank of England

EMA: Exponential moving average

SMA: Simple moving average

RSI: Relative strength index

% K: Fast stochastic

% D: Slow stochastic

MACD: Moving average convergence divergence

Pivot point: PP

Support: S

Resistance: R