USDCAD rose following the Bank of Canada’s (BOC) recent interest rate decisions, indicating a decline in the Canadian dollar (CAD) against the US dollar (USD). Prior to this decision, USDCAD was trading around 1.3434. The BOC’s decision to remove language suggesting it is prepared to raise rates further contributed to this shift, signaling a possible softening of the monetary policy stance.
However, Gov. Tiff Macklem’s subsequent statements created some uncertainty. Although the central bank has not explicitly committed to raising interest rates in the future, Macklem stressed that further rate hikes may be necessary if inflation continues to trend upward. This statement seems to suggest a cautious approach, with the BOC not focusing on raising interest rates, but rather considering how long to maintain the cap rate before lowering it.
From a technical perspective, on the hourly chart, USDCAD’s rise has pushed it above the important 100-hour and 200-hour moving averages, which are currently at 1.3463 and 1.3465, respectively. It also surpassed the 200-day moving average of 1.34823, reaching a high of 1.34918. This upward momentum is a positive sign for buyers, with the currency pair currently trading above these important averages.
For traders who are bullish on USDCAD, maintaining a position above the 200-day moving average of 1.3482 (note the slight decline to 1.3479) presents the most favorable risk scenario. A more conservative approach involves watching his 100-hour and 200-hour moving averages around 1.3463. If the price falls below this level, it would indicate that the technical bias is moving back towards the sellers.
Investors and traders will be closely watching Macklem’s press conference scheduled for 10:30 a.m. ET for further insight and the potential impact on the USDCAD exchange rate.
