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USD/CAD Dives Ahead of BOC Rate Decision

USD/CAD Dives Ahead of BOC Rate Decision

Walker England, Forex Trading Instructor

Talking Points:

The USD/CAD has pressed to new 2017 lows at 1.3018, but the pair is now rebounding from this morning’s decline. Today’s decline has come ahead of tomorrow’s Bank of Canada rate decision, where rates are expected to remain at 0.50%. While rates are expected to be unchanged, traders will look towards future policy cues from Governor Stephen Ploz that may directly affect the USD/CAD.

Technically the USD/CAD has turned bearish with the pair breaking below its daily 200 period moving average (MVA). This average resides at 1.3102, and if prices close beneath this value it will be the first time for the currency pair to do so in three months. While today’s price action qualifies as a daily breakout, traders will next look for the pair to close under the January 12th low at 1.3028. A move beyond this point exposes the next point of daily support near the psychological 1.30000 value. Alternatively if prices rebound near present values, bullish USD/CAD signals may begin again once the pair has risen back above the previously mentioned average.

(Created Using TradingView Charts)

Intraday, the USD/CAD is trading well below today’s S4 pivot at 1.3128. While this bearish breakout occurred earlier in the session, traders may continue to use this point as an intraday point of resistance to time retracement entries. Traders looking for a bullish USD/CAD reversal should also continue to monitor today’s S4 pivot. If prices move back above this point, the next key value for the USD/CAD falls at 1.3150. A move here would suggest an invalidation of this morning’s breakout, and suggest at least a temporary change in the short term trend.

While prices have broken significantly lower, traders should note that intraday resistance for the pair includes both the R3 and R4 pivot. These points are found at 1.3196 and 1.3299 respectfully.

(Created Using TradingView Charts)

--- Written by Walker, Analyst for DailyFX.com

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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