USDCAD surges after BOC rate decision, Hinting at potential upside momentum technically

Following the Bank of Canada’s (BOC) recent rate decision, the USDCAD experienced an increase, indicating a weakening of the Canadian Dollar (CAD) against the US Dollar (USD). Prior to the decision, the USDCAD was trading around 1.3434. The BOC’s decision to remove language suggesting readiness for further rate increases contributed to this shift, suggesting a potential softening in their monetary policy stance.

However, Governor Tiff Macklem’s subsequent statement introduced a degree of uncertainty. While the central bank has not explicitly committed to future rate hikes, Macklem highlighted that further increases could be necessary if inflation trends upward. This statement seems to imply a cautious approach, with the BOC not focusing on rate hikes, but rather considering the duration of maintaining restrictive rates before possibly reducing them.

From a technical perspective, on the hourly chart, the USDCAD’s rise has pushed it above the key 100 and 200-hour moving averages, which are currently at 1.3463 and 1.3465, respectively. The pair has also surpassed its 200-day moving average at 1.34823, reaching a high of 1.34918. This upward momentum is a positive sign for buyers, with the currency pair now trading above these significant averages.

For traders bullish on the USDCAD, maintaining a position above the 200-day moving average of 1.3482 (keeping an eye on a slight drop to 1.3479) presents the most favorable risk scenario. A more conservative approach would involve monitoring the 100 and 200-hour moving averages around 1.3463. Should the price fall below this level, it would indicate a shift in the technical bias back towards the sellers.

Investors and traders will be closely watching Macklem’s press conference scheduled for 10:30 AM ET for further insights and potential impacts on the USDCAD exchange rate.

This article was written by Greg Michalowski at Source