Market Analysis Summary: Bank of Canada Holds Rates Steady

Date: April 29, 2026

Author: Elior Manier

Overview

The Bank of Canada (BoC) has decided to maintain its policy interest rate at 2.25%, marking the fourth consecutive hold since October 2025. This decision reflects a cautious stance amid mixed economic signals and ongoing geopolitical tensions, particularly related to oil prices and the Middle Eastern conflict.

Key Points from the BoC Statement

• The BoC's outlook remains largely unchanged from its January projections, indicating concerns about the strength of the Canadian economy.
• Despite the current economic conditions, the BoC's assumptions are based on a crude oil price of $75 per barrel. If prices remain closer to $100, a more hawkish stance may be adopted in future meetings.
• The Canadian Dollar (CAD) has shown volatility, influenced by fluctuations in oil prices and geopolitical events.

Impact on the Canadian Dollar

The CAD has experienced significant movement due to the ongoing war in the Middle East, with WTI crude oil prices recently bouncing back above $100. This situation creates a dual catalyst for the CAD's performance against major currencies, particularly the USD.

Even if geopolitical tensions ease, the CAD is expected to maintain its strength due to increased oil revenues, which will support the currency in the coming months.

Technical Analysis of USD/CAD

The USD/CAD pair has recently bounced from a support level of 1.3660. With the BoC's neutral stance, the CAD is losing some strength, which may lead to a price action towards the 50-Day Moving Average at 1.37330. Key resistance levels are identified at 1.3720, 1.3750, and 1.39, while support levels are at 1.3675 and 1.3630.

Conclusion

The upcoming press conference by the BoC will be crucial for market participants, as it may provide further insights into the central bank's future policy direction. Traders are advised to monitor oil price movements and geopolitical developments closely, as these factors will significantly influence the CAD's performance in the near term.