USD/CAD Becomes Scalping Target Ahead of BoC Decision
The USD/CAD has found support as a dour Chicago PMI report raised concerns that the manufacturing sector is slowing as the impact from the inventory fades. However, we could see markets quiet with the upcoming Memorial Day holiday weekend looming. Additionally, the Bank of Canada’s rate decision is scheduled for June 1st with policy marker expected to raise rates by 25 bps to 0.50%. The issues in Europe have cast a shadow of doubt over the course of monetary policy which could lead to a period of consolidation before the release.
Key Technical Levels
The USD/CAD has found support at the 200-Day SMA at 1.0479 which could become a solid support level limiting downside risks. Price action has traded along a short-term descending trend line which is providing target levels for entering and exiting positions.
The USD/CAD’s Bollinger band width has widened to 816 pips following a large retracement after failure at parity. Meanwhile, the pair’s recent sharp decline has pushed its ATR to 186 pips which is a major red flag for scalpers. One week implied volatility levels continue to decline as concerns over Europe fade which makes the overall market more conducive for high frequency strategies.
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