Canadian dollar’s direction hinges on Bank of Canada rate decision this week

USDCAD Analysis

Performance after Monday
Period	Pct	Chg	Momentum
Monday	-0.21%	-29 Pips
Week to-date	-0.2%	-27 Pips
June	-0.2%	-27 Pips

Upcoming key events (London Time)

Wed 02:45 PM CAD Bank of Canada Policy Interest Rate

What happened lately

The Canadian economy is poised for a significant development this Wednesday with the upcoming announcement from the Bank of Canada regarding its policy interest rate decision. This event is marked as high impact, indicating that it could potentially lead to substantial movements in financial markets. The decision on the interest rate is a crucial tool used by the central bank to control inflation and stabilize the national economy. Any change or signal of future rate alterations could influence the value of the Canadian dollar significantly.

In recent trading, USDCAD has shown a marginal decline of 0.21%, closing at 1.37110 on Monday. The currency pair is currently in a consolidation phase, with market participants likely awaiting the key announcement from the Bank of Canada before making significant moves. With no other major economic news on the horizon, the market’s focus will undoubtedly be on the central bank’s decision and any accompanying statements that hint at future monetary policy directions.

For the USDCAD pair, the result of the Bank of Canada’s decision may have considerable implications. If the Bank of Canada decides to raise interest rates or signals a hawkish tone, it could lead to an appreciation of the Canadian dollar as higher interest rates make the currency more attractive to investors. This could create downward pressure on the USDCAD pair, leading to a potential decline. Conversely, if the central bank maintains the current rates or adopts a dovish stance, indicating a more relaxed future approach, the Canadian dollar might weaken, allowing the USDCAD pair to rise. Therefore, traders and investors are likely to watch closely for any policy shifts or guidance that could hint at the central bank’s future policy path.

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What can we expect from USDCAD today?

USDCAD on Monday dropped -0.21% to 1.37110. Price is below 9-Day EMA while Stochastic is falling.

Updated daily direction for USDCAD looks mixed as the pair is likely to consolidate above 1.36743 (S1).

Looking ahead today, to see upside interest, we prefer to look at price breakout of last daily high of 1.37390 or trades above daily pivot 1.37067. Break above could target R1 at 1.37433. While to the downside, we are looking at 1.36743 (S1) and daily low of 1.36700 as support levels. USDCAD need to break on either side to indicate a short-term bias. A close below 1.36700 would indicate selling pressure.

For the week to-date, take note that USDCAD is mixed as compared to the prior week.

Key levels to watch out:

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