- After reaching a high of nearly 1.34925 yesterday the USD/CAD has been able to traverse lower.
- As of this writing the USD/CAD is near the 1.33460 mark. Selling pressure has certainly been seen the past handful of hours, but near-term support levels are in sight.
- However traders are anticipating the Bank of Canada’s interest rate decision announcement later today.
- The BoC is not expected to produce any surprises; the central bank faces tough circumstances as lackluster economic data in Canada continues to be demonstrated.
If there are no surprises today from the Bank of Canada this will set the table for the U.S data which will follow on Thursday and Friday. The ability of the USD/CAD price to traverse lower in recent trading may run into support levels which cause reversals higher over the next handful of hours. Yes, volatility will be seen as the BoC makes its Monetary Policy Report public, but fast trading conditions will subside unless there is a major surprise, thus allowing technical trading conditions to take over again until tomorrow’s U.S GDP numbers.
Support near the 1.34400 Level may be Intriguing for Speculators
Technically it appears the 1.34400 level may provide some technical intrigue in the short-term as support. If this level continues to be prove durable traders may continue to use it as a magnate over the next handful of hours. A move below this support level could set up a test of lows seen early in the week around the 1.34350 to 1.34200 ratios.
Traders should not be overly ambitious in the coming hours, but the USD/CAD will likely see its range widen today as the Bank of Canada interest rate announcement approaches. If the wider support levels hold after the BoC interest rate decision being published, financial institutions will certainly then start to position for tomorrow’s growth data from the U.S, to be followed by inflation statistics on Friday from the States.
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USD/CAD Risk Management Essential in the Near-Term
USD/CAD traders will need risk management working in full today, tomorrow and Friday. The Bank of Canada is expected to maintain its Overnight Rate at 5.00%. Any change to this number would catch most traders off guard and cause instant volatility. If the BoC were too surprise with a change to interest rates it would likely be a cut to the borrowing costs to try and stimulate growth.
- Recent downward movement in the USD/CAD is intriguing, but sellers should use take profit orders to make sure their gains do not vanish into thin air if reversals higher are demonstrated.
- Having provided a solid downturn already today, traders should be wary of additional choppy conditions developing in the short-term.
Canadian Dollar Short Term Outlook:
Current Resistance: 1.34480
Current Support: 1.34390
High Target: 1.34610
Low Target: 1.34260
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