USD/CAD: On the eve of the Bank of Canada meeting

At the end of last month, the Canadian dollar strengthened after the publication of a positive report by Statistics Canada on the country's GDP (and the USD/CAD pair declined quite significantly), also receiving support from rising oil prices against the backdrop of Saudi Arabia's decision to continue cutting production.

Canada is a major oil exporter, primarily to the United States, and rising oil prices provide natural support to the Canadian dollar.

Nevertheless, the decline in USD/CAD stopped at the beginning of the new week, and the pair found support at the key level of 1.3420 in anticipation of the outcome of tomorrow's meeting of the Bank of Canada on monetary policy issues. The decision of the Canadian Central Bank on the interest rate will be announced tomorrow at 14:00 (GMT). In the accompanying statement, the bank's management will explain the decision taken.

It is expected that it, led by Tiff Macklem, will keep interest rates at 4.5%, and, as we see, there are a number of reasons for this: the economy is growing, the labor market remains tense, and inflation in Canada is steadily declining (in April, annual inflation in the country was 4.4%).

Moreover, some economists believe that the Bank of Canada has already completed the tightening cycle and may be one of the first among the world's largest central banks to begin easing monetary policy, primarily against the backdrop of slowing inflation in the country.

At the same time, another part of economists assumes that at the end of the year the final rate will be close to 4.9%. This means that two more rate hikes from the current level of 4.50% are expected until then.

Thus, a certain amount of intrigue in this matter still remains, although most economists agree that at Wednesday's meeting the Bank of Canada will not make changes to the parameters of its current policy.

Taking into account the Fed's tendency to further increase its interest rates, it can be assumed that the current decline in USD/CAD to 1.3420, 1.3400, 1.3370 marks is a good zone for resuming purchases of this pair.

Support levels: 1.3420, 1.3400, 1.3370, 1.3315, 1.3200, 1.3135, 1.3075.

Resistance levels: 1.3450, 1.3475, 1.3503, 1.3515, 1.3600, 1.3665, 1.3700, 1.3810, 1.3860, 1.3900, 1.3970, 1.4000.