- USD/CAD retreats from a multi-year high, although the decline appears limited.
- Rising crude oil prices benefit the CAD and put pressure on the currency pair.
- The technical setup supports the possibility of some buying at lower levels.
The USD/CAD pair retreats during the Asian session on Wednesday, although it lacks continuation and remains near the highest level since April 2020 touched the previous day. The pair is currently trading just above the 1.4100 zone, down less than 0.10% on the day, as traders eagerly await the US consumer inflation figures and policy decision. of the Bank of Canada (BoC) before opening new directional positions.
Meanwhile, rising crude oil prices appear to benefit the commodity-linked CAD and put some pressure on the USD/CAD pair. That said, expectations of a bigger rate cut by the BoC could hold back traders from opening aggressive bullish positions around the Canadian Dollar (CAD). Furthermore, the growing market conviction that the Federal Reserve (Fed) will take a cautious stance on reducing interest rates helps the US Dollar (USD) preserve its gains recorded in the last three days and acts as a tailwind. for the currency pair.
From a technical perspective, the recent sustained break and acceptance above the 1.4100 level was considered a key trigger for bullish traders. Furthermore, the oscillators on the daily chart remain comfortably in positive territory and are still far from being in the overbought zone, suggesting that the path of least resistance for the USD/CAD pair remains to the upside. Therefore, any further decline could still be seen as a buying opportunity and remain capped near the mentioned zone, which should now act as a crucial point.
Some follow-through selling, leading to weakness below the 1.4070 support zone, could trigger some unwinding of long positions and drag the USD/CAD towards the 1.4020 zone en route towards the psychological level of 1.4000. The corrective pullback could extend further towards the next relevant support near the 1.3960-1.3950 zone en route towards the November 25 low, around the 1.3925 region.
On the upside, the 1.4200 level could continue to act as an immediate barrier, above which the USD/CAD pair could overcome an intermediate hurdle near the 1.4260 area and test the April 2020 high, around round figure of 1.4300. The pair could eventually rise towards the 1.4335-1.4340 region.
USD/CAD daily chart
Economic indicator
BOC interest rate decision
He Bank of Canada announces the interbank interest rate. This rate affects a range of interest rates set by commercial banks, building societies and other institutions for their own borrowers and depositors. It also affects exchange rates. If the Bank of Canada is firm on the economy’s inflationary outlook and raises rates, this is bullish for the Canadian dollar, while an outlook for reduced inflationary pressures will be bearish.
Next post:
Wed Dec 11, 2024 2:45 p.m.
Frequency:
Irregular
Dear:
3.25%
Previous:
3.75%
Fountain:
Bank of Canada
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
