USDCAD sellers hold the reins for the sixth consecutive week so far as traders await the Bank of Canada (BoC) interest rate decision on Wednesday. That said, the BoC’s likely 0.25% rate hike is expected to join the bearish MACD signals and favor the pair bears. However, a convergence of an upward-sloping trend line from June 2022 and a 50% Fibonacci retracement of the quote’s June-October 2022 upside, near 1.3250, appears a tough nut to crack for the sellers. Adding strength to the stated support is the RSI conditions suggesting a recent weakness in downside momentum. Even if the quote breaks the 1.3250 support, the 200-DMA level surrounding 1.3180 could act as the last defense of the Loonie pair buyers.
Alternatively, a surprise disappointment from the BoC, either with or without the rate lifts, could trigger the much-awaited USDCAD rebound. In that case, the 100-DMA and previous support line from September 2022, close to 1.3500-10, will be a strong hurdle to watch for the bull’s entry. Following that, a run-up towards the previous monthly high near 1.3700 can’t be ruled out. It should be observed that the pair’s successful rise beyond the 1.3700 resistance can witness multiple challenges between 1.3810 and 1.3830, a break of which could direct buyers towards the previous yearly top marked in October around 1.3975.
To sum up, USDCAD is likely to remain bearish unless the BoC offers any negative surprises. However, the downside room is limited.