USDCAD portrays bearish consolidation on BoC Day
USDCAD remains unimpressive after breaking a seven-week-old horizontal support zone the previous day. That said, the RSI (14) rebounds from oversold territory and hence lures the buyers. However, a clear upside break of the support-turned-resistance area surrounding 1.3410, backed by the Bank of Canada’s (BoC) hawkish tone, becomes necessary to convince buyers. Even so, the 200-SMA hurdle of near 1.3520 and a three-week-old resistance area surrounding 1.3565-70 can check the upside momentum before directing it to the previous monthly peak of around 1.3655 and then to April’s top near 1.3670.
On the flip side, BoC is expected to keep the benchmark rates unchanged and hence a dovish tone or a signal to cut rates in futures would be enough to convince USDCAD bears. In that case, an upward-sloping support line from mid-April, close to 1.3350 by the press time, appears the key support for the pair sellers to watch during the quote’s further weakness. Should the Loonie pair sellers manage to keep the reins past 1.3350, the odds of witnessing a downward trajectory towards the yearly low marked in January around 1.3260 can’t be ruled out.
To sum up, USDCAD is likely to recover but the upside hinges on how well the BoC can defend hawks despite keeping the monetary policy unchanged.
