USD/CAD Price Analysis: Refreshes five-month high near 1.3670 ahead of BoC policy
- USD/CAD refreshes a five-month high near 1.3670 as the BoC is expected to keep interest rates unchanged.
- The BoC might keep interest rates unchanged at 5% as hiring and consumer spending slowed due to higher inflation.
- USD/CAD recovered sharply after sensing decent buying interest near the 20-day EMA.
The USD/CAD pair prints a fresh five-month high at 1.3670 ahead of the interest rate decision by the Bank of Canada (BoC), which will be announced on Wednesday. Investors anticipate that the policy divergence between the Federal Reserve (Fed) and the BoC will remain stable as the latter is expected to keep the monetary policy unchanged.
BoC Governor Tiff Macklem might keep interest rates unchanged at 5% as hiring and consumer spending slowed due to higher inflationary pressures.
S&P500 futures posted nominal losses in the European session, indicating a cautious opening after an extended weekend. The US Dollar Index (DXY) prints a fresh five-month higher at 104.70 as US recession fears receded due to cooling inflation and a stable job market. The 10-year US Treasury yields climb to near 4.23%. A power-pack action is anticipated from the USD Index in the New York session as US markets will open after a long weekend.
USD/CAD extends its rally and prints a fresh five-month high at 1.3670. The pair recovered sharply after sensing decent buying interest near the 20-day Exponential Moving Average (EMA) around 1.3520. The Relative Strength Index (RSI) (14) trades in the bullish range of 60.00-80.00, and is not showing signs of oversold and divergence.
For more upside, the Loonie asset needs to surpass the round-level resistance of 1.3700 decisively, which will open doors for further upside to March 27 high at 1.3746 and March 24 high around 1.3800.
On the flip side, a breakdown below September 1 low around 1.3490 would drag the asset towards August 15 low around 1.3440, followed by July 7 high at 1.3387.
USD/CAD daily chart
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Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
