Bank of Canada (BOC) is up for the first rate-hike since 2017 but the markets are have already priced in a 0.25% lift to the benchmark rate, which in turn may not entertain the USDCAD bears until forward guidance appears hawkish. Technically, 100-EMA and 200-EMA offer strong supports near 1.2660 and 1.2640 to limit the quote’s short-term downside. If the pair bears conquer the 1.2640 support, a downward trajectory towards the 61.8% Fibonacci retracement of October-December 2021 upside, near 1.2550, can’t be ruled out. However, an upward sloping trend line from October 2021, near 1.2520, will be a tough nut to crack for the sellers afterward.
Alternatively, a disappointment, or negative surprise, from the forward guidance could trigger the quote’s recovery moves towards the mid-December 2021 low near 1.2760. Following that, the 1.2800 threshold and 1.2850 levels may entertain USDCAD bulls before directing them to February’s peak of 1.2877.
Overall, BOC may not please USDCAD bears until doing more than what is already expected. Other than the BOC, OPEC+ meeting and geopolitics also keep the spotlight on the Loonie pair as prices of Canada’s key export WTI crude oil rally of late.