The USD/CAD has begun to demonstrate a serious ability to maintain its lower depths, and even after ‘jumping’ to a high of nearly 1.33880 on Friday the currency pair then began to reverse back towards it lower depths. While the U.S jobs numbers came in weaker than expected, and inflation data was higher than anticipated, the USD/CAD still managed to resume a downwards trend.
Bank of Canada Overnight Rate Decision will be Released Tomorrow
The current price of the USD/CAD is near the 1.32520 ratio as of this writing. Support levels from last week are clearly the next targets by sellers of the currency pair. However, day traders should keep in mind the Bank of Canada will get everyone’s attention over the next day because it is likely to raise its Overnight Rate by another 0.25%. This is particularly interesting because the USD/CAD has been able to sustain lower momentum without a strong amount of selling velocity the past month.
The fact that financial institutions also believe the U.S Federal Reserve will hike its interest rate on the 26th of July and may have to remain more aggressive than previously thought has not created a surge higher in the USD/CAD. In other words, the threat and actions by a hawkish BoC are seemingly helping the USD/CAD maintain an incrementally polite move lower. On the 12th of June the USD/CAD was trading near a high around the 1.33880 mark briefly, which was the high the Forex pair essentially challenged this past Friday before reversing lower.
USD/CAD Equilibrium creates Technical Trading Opportunities
- The ability of the USD/CAD to linger within its current price ratios and bounce along support and resistance levels could prove to be an opportunity for speculators with short-term wagers.
- Tomorrow’s Bank of Canada interest rate decision will make news, but importantly its outlook could cause volatility via the BoC Monetary Policy Report.
USD/CAD traders should be careful and monitor the currency pair before and after the BoC rate decision and its outlook are made public. Solid risk management is strongly advised and the USD/CAD will certainly test a wider range tomorrow. If the Bank of Canada remains hawkish regarding its interest rates forecast for later this year, this could be enough to continue to push the USD/CAD to lower depths, but traders should not be overly ambitious regarding their price targets. Quick hitting trades using take profit and stop losses should be used wisely, because surprises could be delivered from the Bank of Canada.
Canadian Dollar Short Term Outlook:
Current Resistance: 1.32650
Current Support: 1.32470
High Target: 1.33380
Low Target: 1.31410
Ready to trade our daily Forex analysis? We’ve made a list of the best forex brokers in Canada for beginners to trade Forex worth using.