USD/CAD Fundamental Analysis
The currency pair USD/CAD extended its decline for the 5th consecutive session on Wednesday. The currency pair is experiencing pressure ahead of the Bank of Canada’s key rate decision today. In a few minutes, the Monetary Policy Report and Rate Statement will be released by BoC. It is expected that Bank will announce the 8th consecutive interest rate hike to reduce the country’s extreme inflation levels.
Furthermore, the Crude Oil WTI was also rising on the day with +0.41% gains at 80.47 per barrel. It strengthened the CAD and added extra pressure on USD/CAD pair prices. The Crude Oil Inventories data from the US will also release in the coming hours. They are expected to be this week as 1.2M barrels.
Meanwhile, the USD Index (DXY) was rising with _0.09% gains in 24 hours at 102.01. However, the rising USD was not enough to overpower the selling pressure ahead of the BoC interest rate decision. Traders will keep a close eye on Crude Oil Inventories data as it will have an impact on Crude prices and commodity-driven currency CAD.
USD/CAD Technical Analysis
Over the past 2-weeks, the USD/CAD pair has been moving in consolidation while building a floor of around 1.33093. However, prior to the release of the BOC interest rate decision, the bears seemed to be determined to keep selling pressure stable.
The MACD Indicator is moving sideways with the red signal line in the negative territory. Furthermore, the Stochastic Indicator has moved past the oversold area. Both these indicators suggest more chances of downside momentum than upside in the upcoming trading sessions.
Once the selling pressure accelerates, immediate support will come to the rescue from the tentative support line from the August low at 1.3316. Any break of this level could push the price towards a 50.0% Fibonacci retracement of 1.23921 – 1.39771 at 1.3255. Another thing to notice is that the 200-day SMA is also hovering at the same level.
Any close below this level could press the prices aggressively towards the 1.30497 level, where the 200-Day SMA is moving flat in the Weekly chart. If level 1.31916 manages to hold the price, it could break the bearish trend.
On the bullish side, the price can see immediate resistance at the 20-SMA level of 1.3465. Prior to this level, the next resistance could be at the 23.6% Fibonacci level of 1.36095. Any break above this level could prompt an aggressive bullish rally towards the psychological number at 1.37107.
In short, currently, the technical outlook of USD/CAD is suggesting downside momentum ahead for a while. The crucial support might be at the 1.3316 level; traders should monitor this level before taking any decision.
USD/CAD Daily Technical Levels
Pivot Point: 1.3377