The USDCAD pair is holding within narrow range near the high of three-day recovery at 1.3141 on Wednesday and awaiting the outcome of today’s key events, Bank of Canada rate decision, Fed chair Powell’s testimony to the Congress and the minutes of FOMC last meeting.
BoC is expected to leave interest rates unchanged at 1.75%, but is likely to raise economic growth forecast for the second quarter, diverging from other major central banks’ plans to impose additional stimulus, due to rising concerns of global growth slowdown.
Traders also focus on Jerome Powell’s two-day testimony to the Congress, with expectations for fading aggressive approach on 0.5% rate cut on July 31 FOMC policy meeting after strong labor sector results released last Friday.
The central bank is widely expected to opt for 0.25% cut, on weak inflation and concerns about negative impact on the economy from US/China trade conflict.
The loonie may advance on hawkish tone from BoC governor Poloz, however, stronger greenback on Fed’s stance on limited rate cuts, may partially offset the impact.
Daily studies of USDCAD pair show rising momentum but fresh bulls need more evidence for confirmation.
Break of immediate resistances at 1.3140 zone would generate initial bullish signal, but confirmation of recovery continuation would require sustained break above key barriers at 1.3182/88 (falling 20SMA / Fibo 38.2% of 1.3432/1.3037 descend) that would open way towards 1.3248 (30SMA) and 1.3286 (200SMA) in extension..
On the other side, sideways-moving 10SMA marks initial support at 1.3095 and guards another pivot at 1.3052 (cracked Fibo 38.2% of 1.2061/1.3664 ascend), close below which would generate negative signal for attack at psychological 1.30 support and possible continuation of the downtrend from 1.3564 (31 May peak) on firm break lower.
Res: 1.3145, 1.3188, 1.3235, 1.3286
Sup: 1.3119, 1.3095, 1.3052, 1.3000
