The US Dollar (USD) inched lower against the Canadian Dollar (USD) on Wednesday, decreasing the price of USD/CAD to less than 1.3350 ahead of the Bank of Canada’s interest rate decision. The technical bias remains bullish because of a higher high in the recent upside move.
As of this writing, the pair is being traded around 1.3328. A hurdle can be seen near 1.3342, the confluence of 23.6% fib level as well as short term horizontal resistance as demonstrated in the given below daily chart. A break and hourly closing above the 1.3342 resistance shall trigger fresh buying pressure, opening door for a move towards the 1.3400 resistance, the psychological level.
On the downside, a support may be seen near 1.3309, the low of last major downside move on hourly timeframe ahead of 1.3296, the trendline support as demonstrated with pink color in the given above hourly chart and then 1.3250, the psychological number. The technical bias shall remain bullish as long as the 1.3296 support zone is intact.
How USDCAD Reacted on BoC Interest Rate Decisions in Past?
The Bank of Canada (BoC) has been maintaining its benchmark interest rate at 0.5% since May 2015. So we haven’t see noticeable volatility in the USDCAD pair after the release of last few monetary policies by the BoC. The pair however does show volatility on hawkish/dovish remarks in the monetary policy statements.
What Assets to Trade?
In addition to USDCAD, trading CADJPY, GBPCAD and CHFCAD can be a good strategy as the aforementioned pairs are highly reactive to the BoC interest rate decision.
Considering the overall technical and fundamental outlook, selling the pair around current levels can be a good strategy in short to medium term.