The Bank of Canada is set to update the market on their latest interest rate decision tomorrow and traders are expecting plenty of volatility around the event in the Canadian dollar. The market is strongly expecting the bank to keep rates on hold at 2.25% but is also expecting plenty of action around the forward guidance delivered in the Rate Statement and subsequent Press Conference.
Given recent geopolitical turbulence from the conflict in the Middle East and its impact on Oil, and trade issues with the US and fundamental concerns with sticky inflation and a weak economy the propensity for moves in the currency is high.
USDCAD is sitting just above support levels on the daily chart with the 200-day moving average now coming in around 1.3835 while short-term resistance sits around 50 pips higher than the market on recent intra-day highs just above 1.3900, given traders strong technical levels to leverage off whatever way the bank falls in terms of guidance. A more hawkish outlook should see some good CAD buying to take out the close support levels, while a more cautious and dovish stance should see resistance levels challenged.
Resistance 2: 1.3956 – Trendline Resistance
Resistance 1: 1.3911 – 31 August High
Support 1: 1.3836 – 200-Day Moving Average
Support 2: 1.3749 – Trendline Support
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