The Canadian dollar is about to end the day unchanged against the US dollar, earlier it reached a 5-week high. It holds a bullish tone and is challenging a strong technical area.
Consolidating at weekly lows
USD/CAD dropped today to 1.3484, the lowest since April 25. Then it climbed back above 1.3500 and during the last hours, it remained steady hovering around 1.3500/10.
The pair continues to move with a clear bearish bias in the short-term but it respected so far the 1.3490-1.3500 support area. A consolidation below could clear the way to more losses. On the upside, the US dollar needs to rise back above 1.3600 in order to gain strength.
Traders waiting for Wednesday
Momentum favors the downside in the USD/CAD as crude oil continues to recover (WTI is up almost 1% today) and amid a weak US dollar (DXY dropped to 6-month lows under 97.00).
US Dollar rebound loses momentum ahead of 97
WTI pushes higher, around $51.30
The key day of the week for the pair is Wednesday. That day, at 14:00 GMT, the Bank of Canada will announce its decision on monetary policy. No change in rates is expected and traders will focus on the statement. According to Brown Brothers Harriman analysts, the central bank will retain its current cautiousness with rates remaining on hold.
Later on Wednesday, the Federal Reserve will release the minutes of the latest FOMC meeting. The US central bank, as expected, left interest rate unchanged. Traders will look for clues about what the Fed will do in June. The CME Fed Watch Tool, based on Fed Fund futures contract prices, shows a probability of 78.5% of a rate hike in June.
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