BoC is widely expected to raise interest rate by 25bps to 0.50% today to kick start the tightening cycle. The central bank might also announce the plan to shrink its balance sheet. Overall tone of the statement should remain hawkish, setting the stages for more rate hikes ahead. Some analysts are expecting the policy rate to hit 1.25% by the end of the year.
Some previews on BoC
- Bank of Canada to start rate hike cycle
- BOC Preview: Will the Bank of Canada be the Next Central Bank to Liftoff?
- Currency Pair of the Week: USD/CAD
- Bank of Canada Rate Hike Expected Despite Geopolitical Turbulence
EUR/CAD’s down trend is trying to resume by breaking through 1.4098 low. But that’s more due to Euro’s broad based selloff than Canadian’s strength. Key level lies in 61.8% projection of 1.5096 to 1.4162 from 1.4633 at 1.4056. Sustained break there could prompt downside acceleration to 100% projection at 1.3699.
Above 1.4303 minor resistance will delay the bearish case and bring some consolidations. But outlook will remain bearish as long as 1.4633 resistance holds.
