USDCAD retreats from 1.3600 resistance ahead of BoC announcements
USDCAD takes offers to refresh the intraday low near 1.3570 while snapping a two-day uptrend ahead of the Bank of Canada (BoC) Interest Rate Decision. In doing so, the Loonie pair reverses from a convergence of the 100-day Exponential Moving Average (EMA) and a month-old descending trend line, around 1.3600 by the press time. It’s worth noting that the BoC is expected to keep the monetary policy unchanged but the latest rebound in the Crude Oil price, Canada’s key export, could join the hawkish commentary from the central bank, if any, to drag the quote further toward the 200-EMA. The expectations of a pullback in prices also take clues from bearish MACD signals and sluggish RSI. That said, the quote’s weakness past the 200-EMA level of 1.3518 appears difficult as the bottom line of a five-week-old bearish channel, forming part of a broader “bull flag” formation, could challenge the bears around 1.3470.
Alternatively, a daily closing beyond the 1.3600 resistance confluence will enable the USDCAD buyers to aim for the bull flag confirmation by crossing the 1.3685 upside hurdle. Following that, the quote’s theoretical rally towards 1.4500 gains attention. However, the previous monthly high of around 1.3900 and the 1.4000 psychological magnet could test the Loonie pair buyers. It should be observed that the April 2020 high surrounding 1.4300 also acts as an upside filter should the quote remain firmer past the 1.4000 threshold.
Overall, the USDCAD is likely to decline ahead of the BoC’s verdict. However, the downside room appears limited.
