Bank of Canada cuts rates to 2.50%, FOMC coming up!— North American mid-week Market update

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Log in to our mid-week North American Markets overview, where we examine the current themes in North America and provide an overview of indices and currency performances.

This week finally lands some fundamental change for the currency space, and this will influence Markets for the time to come.

After North American Central Banks holding due to tariffs uncertainty, the latest round of data provided what they needed for their decision-making:

The Bank of Canada cuts its main rate to 2.50% after its last cut in March 2025. The change in policy reflects mounting evidence of economic weakness — Canadian GDP keeps contracting with the Q2 numbers and August saw a steep 60K job loss, underlining a still deteriorating labor market.

Tariffs on key exports pressured growth leaving no choice for Macklem and the BoC to cut – this comes particularly as Macklem puts less emphasis on inflationary pressures.

You can access his statement right here.

Governor Tiff Macklem is actually speaking as I write this piece, and the speech is dovish/pessimistic on the Canadian Economy.

Also check out our most recent piece on the data right here.

The Federal Reserve is now expected to follow suit, with labor market cracks showing in the two most recent NFP releases – Despite US Inflation still elevated, Powell's August shift at the Jackson Hole speech indicated a switch in the FED's narrative (and added pressure from the Trump Administration).

Furthermore, with the negative PPI print and a not-too-hot CPI, the green light is here for the FED to start cutting.

With the sudden new balance of doves in the FED with Miran entering the meeting just before its start and Lisa Cook not being part of the meeting, an expected more dovish dot plot led to a huge selloff in the US Dollar, particularly as pre-meeting hedging accelerated.

Read More:

• Access technical levels for major FX pairs ahead of the FOMC rate decision
• Fed (FOMC) Meeting Preview: 25 bps Cut Appears Baked In, Forward Guidance Is Key. Implications for the DXY, Dow Jones and S&P 500
• Guide to the FOMC statement and September SEP: Key takeaways and what to watch

Let's dive right into a few charts to get an overview on North American Markets, from US and Canadian equity Markets performance, USD and CAD performance to USDCAD and DXY charts.

North-American Indices Performance

North American Top Indices performance since last Monday – September 17, 2025 – Source: TradingView

North-American indices are still ravaging their way higher without leaving much space for bears.

The ongoing rallies are particularly impressive when looking at other indices, particularly in Europe (Yellow) which struggled quite a lot in the past 1.5 week.

The TSX left its throne for the Nasdaq which has been performing sensationally – We will see what was the effect of the most recent Bank of Canada rate cut for the TSX.

There is an ongoing profit-taking move in Equities right ahead of the FOMC that is to be monitored!

Dollar Index 8H Chart

Dollar Index 8H Chart, September 17, 2025 – Source: TradingView

As detailed in the chart published in our pre-FOMC FX technical level analysis, the Dollar Index freshly broke its August consolidation range and has stopped its free-fall just before its 2025 yearly lows (96.53 vs 96.23 July 1st lows).

I also invite you to check out our most-recent DXY analysis to get further information on why the greenback moved so much these past few sessions.

Levels to watch for the Dollar Index:

Support Levels:

• 2025 Lows Major support 96.50 to 97.00
• Early 2022 Conslidation just below 96.00
• 95.00 Key Support

Resistance Levels:

• Range support now Pivot 97.50 (immediate resistance)
• 98.00 higher timeframe Pivot
• Current range Extreme resistance 98.50
• 100.00 Main resistance zone

US Dollar Mid-Week Performance vs Majors

USD vs other Majors, September 17, 2025 - Source: TradingView.

As seen through the DXY chart, the US Dollar throughout the past two weeks but the beating accelerated throughout the beginning of this week particularly.

The Australian Dollar, Kiwi and Swissie are the two winners of the USD downfall but it seems that there is an ongoing (small) mean-reversion move.

1.5% to 2% move ranges are still huge, particularly in a precedently slow FX Market.

Canadian Dollar Mid-Week Performance vs Majors

CAD vs other Majors, September 17, 2025 - Source: TradingView.

The CAD also took a beating since the release of the Canadian Employment figures as seen in the past week Mid-Week report.

Saved by an even lower US Dollar, the Loonie has started to form some type of intermediate bottom despite the dovishness from Macklem – The Canadian Dollar is still at its cycle lows against all European currencies and depreciating also against the JPY, however the latter is a bit more balanced as of late.

Intraday Technical Levels for the USD/CAD

USDCAD 4H Chart, September 17, 2025 – Source: TradingView

Even with the dovish Bank of Canada, the CAD is holding decently strong in today's session – It seems that after the terrible employment data, the beating that the Loonie took priced this exact dovishness as can be seen in the current hesitant upward candle (gravestone doji).

Maybe a Sell the fact is taking place for the USDCAD? We will see after the FOMC what happens – I would look at EURUSD or the DXY also to see if USD weakness continues.

Levels to place on your USDCAD charts:

Resistance Levels

• BoC highs 1.3772
• 1.38 Handle +/- 150 pips
• 1.3850 to 1.3860 Main resistance
• 1.3925 Aug 22 highs

Support Levels

• Key longer-term pivot turned support 1.3750 (currently testing)
• 1.3660 intermediate support
• 1.3550 Main 2025 Support

US and Canada Economic Calendar for the Rest of the Week

US and Canadian Data for the rest of the week, MarketPulse Economic Calendar

This ongoing session is huge and still far from over!

The BoC rate decision (09:45 ET) and press conference just concluded with the as expected rate cut to 2.50%, pretty bearish on the Canadian economy but the CAD is holding well (for now).

In about 2.5 hours, the spotlight shifts to the Fed at 14:00 ET, with the rate decision, economic projections, and dot plot, capped by Powell’s press conference at 14:30 ET.

So much will be on the line for this FED Meeting which will keep Markets occupied for the entire session and upcoming weeks.

The rest of the week has less on its plate:

On Thursday, focus moves back to the U.S. labor market with the usual weekly jobless claims and the Philly Fed survey at 08:30 ET.

Energy traders will also watch the EIA natural gas storage change at 10:30 ET.

Friday closes with Canada’s Retail Sales (MoM, Jul), offering another read on consumer resilience or lack thereof.

The Bank of Canada now expects a decent rebound towards the end of the year or should keep cutting rates.

Watch the data closely (Retail sales actually was one of the better Canadian data and will have to hold).

Safe Trades in preparation of the FOMC!

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