We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Mixed
GBP/USD
Mixed
USD/JPY
Bullish
Gold
Bullish
Oil - US Crude
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Bitcoin
Bearish
More View more
Notice

DailyFX PLUS Content Now Available Freely to all DailyFX Users

Real Time News
  • Heads Up: 🇪🇺 (EUR) Markit/BME Germany Composite PMI (SEP P) due at 07:30:00 GMT (15min) Expected: 51.5 Previous: 51.7
  • Heads Up: 🇪🇺 (EUR) Markit Germany Services PMI (SEP P) due at 07:30:00 GMT (15min) Expected: 54.3 Previous: 54.8
  • Forex Update: As of 07:00, these are your best and worst performers based on the London trading schedule: 🇦🇺AUD: 0.11% 🇳🇿NZD: 0.02% 🇨🇭CHF: -0.04% 🇪🇺EUR: -0.09% 🇨🇦CAD: -0.10% 🇯🇵JPY: -0.15% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/hdDDQ0oVLI
  • Heads Up: 🇪🇺 (EUR) Markit/BME Germany Manufacturing PMI (SEP P) due at 07:30:00 GMT (15min) Expected: 44.0 Previous: 43.5
  • CHF Switzerland August M3 Money Supply YY: Actual: 2.7% Previous: 3.2%
  • Join @DavidCottleFX 's #webinar at 4:00 AM ET/8:00 AM GMT for your weekly update on the top Asia Pacific market drivers that traders should watch this week. Register here: https://t.co/HNf3Axw8s5 https://t.co/KUJecuuyWg
  • Indices Update: As of 07:00, these are your best and worst performers based on the London trading schedule: US 500: 0.36% Wall Street: 0.32% France 40: -0.10% Germany 30: -0.32% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/m9Hm0d41Lt
  • European Opening Calls From IG: #FTSE 7345 +0.00% #DAX 12433 -0.28% #CAC 5675 -0.27% #IBEX 9151 -0.31% #STOXX 3558 -0.39%
  • What is prop trading and how can retail traders benefit? Tune into the #podcast episode featuring Morad Askar, aka Futures Trader 71. Only on Global Markets Decoded. Tune in here: https://t.co/2jDvD9L1Er https://t.co/STqSwY7OBT
  • Crude Oil Prices May Fall on ECB Commentary, US PMI Data - https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/commodities/2019/09/23/Crude-Oil-Prices-May-Fall-on-ECB-Commentary-US-PMI-Data.html?utm_source=Twitter&utm_medium=Spivak&utm_campaign=twr #CrudeOil #ECB #PMI #OOTT
USD/CAD Rate Forecast: Post-BoC Rally Triggers RSI Breakout

USD/CAD Rate Forecast: Post-BoC Rally Triggers RSI Breakout

2018-12-06 15:30:00
David Song, Currency Strategist
Share:

Canadian Dollar Talking Points

USD/CAD climbs to a fresh year-high (1.3445) as the Bank of Canada (BoC) adopts a less-hawkish tone ahead of 2019, and recent price action keeps the topside targets on the radar as the Relative Strength Index (RSI) flashes a bullish signal.

Image of daily change for major currencies

USD/CAD Rate Forecast: Post-BoC Rally Triggers RSI Breakout

Image of daily change for usdcad rate

The Canadian dollar may continue to depreciate against its U.S. counterpart as the BoC sees ‘additional room for non-inflationary growth,’ and it seems as though the central bank will stay on the sidelines at the next meeting on January 9 as inflation ‘is expected to ease in coming months by more than the Bank had previously forecast.’

Image of bank of canada interest rate decisions

Keep in mind, the BoC may continue to prepare Canadian households and businesses for higher borrowing-costs as Governor Stephen Poloz warns that central bank is ‘looking to move interest rates to a neutral level,’ but the fresh remarks suggest the Governing Council will take a more gradual approach in normalizing monetary policy after delivering three 25bp rate-hikes in 2018.

With that said, the shift in the forward-guidance for monetary policy may continue to produce headwinds for the Canadian dollar especially as the Federal Reserve is widely expected to implement higher U.S. interest rates later this month, and USD/CAD may continue to appreciate ahead of Canada's Employment report as the exchange rate carves a series of higher highs & lows.

At the same time, recent developments in the Relative Strength Index (RSI) highlights a similar dynamic as the oscillator breaks out of the bearish formation carried over from the previous month, with a break above 70 raising the risk for a further advance in USD/CAD as the bullish momentum gathers pace. Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups.

USD/CAD Daily Chart

Image of usdcad daily chart
  • Broader outlook for USD/CAD remains constructive despite the dip below trendline support as the exchange rate clears the June-high (1.3386), with the recent series of higher highs & lows raising the risk for a larger advance especially as the Relative Strength Index (RSI) appears to be breaking out of a triangle/wedge formation.
  • Nevertheless, need a break/close above the 1.3420 (78.6% retracement) 1.3460 (61.8% retracement) region to open up the 1.3540 (23.6% retracement) hurdle, with the next area of interest coming in around 1.3630 (38.2% retracement) to 1.3660 (78.6% expansion).

USD/CAD Rate Forecast: Post-BoC Rally Triggers RSI Breakout

Additional Trading Resources

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader’ series on how to effectively use leverage along with other best practices that any trader can follow.

Want to know what other currency pairs the DailyFX team is watching? Download and review the Top Trading Opportunities for 2018.

--- Written by David Song, Currency Analyst

Follow me on Twitter at @DavidJSong.

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

DISCLOSURES

News & Analysis at your fingertips.