- Finds support from weaker oil prices and firmer US dollar amid US-China trade tensions.
- Focus shifts to BOC rate decision and EIA crude stockpiles data for fresh direction.
USD/CAD is on a rising trend so far this week and hit fresh four-day highs at 1.3155 in Asia before reversing sharply to the 10-DMA support near 1.3130 region, where it now wavers.
USD/CAD: BOC rate decision in focus
The latest leg down in the major can be attributed to a fresh round of selling seen in the US dollar versus its major rivals, as the USD bulls take breather heading into the European session.
Moreover, a bout of profit-taking in the Canadian dollar cannot be ruled out after the overnight sell-off, as markets resort to repositioning ahead of the key Bank of Canada (BOC) interest rate decision due to be announced at 1400 GMT.
The BOC is widely expected to deliver a 25bps rate hike, with the analysts at TD Securities (TDS) noting, "the Bank should reiterate that hikes will be gradual and guided by incoming data, but we do not expect additional forward guidance. Though GDP and CPI forecasts should be stable, FX focus will be on the Bank's messaging over prospective risks to the outlook, including trade. Note here the Bank will be incorporating tariffs already announced into its projection."
Earlier today, the spot staged a solid comeback amid broad-based US dollar strength and a sharp drop in oil prices, after the US threatened to slap another round of additional tariffs on USD 200 billion tariffs worth of the Chinese imports.
USD/CAD Technical Levels
The Swissquote Bank Research Team sees bullish bias above 1.3110 for USD/CAD.
“Long positions above 1.3110 with targets at 1.3160 & 1.3175 in extension. Below 1.3110 look for further downside with 1.3090 & 1.3065 as targets.”
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