The USDCAD pair is holding firmly in red for the third straight day and near one-month low, posted on Wednesday after a BOC hawkish hike.
The Bank of Canada surprised markets by raising interest rate by 25 basis points to 4.75%, the highest in 22 years, after being on hold since January and evaluating the impact of previous tightening cycle, in which the central bank raised borrowing cost eight times to 4.50% since March 2022.
Noting that underlying inflation remains stubbornly high, the central bank expressed strong concerns about prolonged elevated price pressures and said that monetary policy was not sufficiently restrictive to push inflation towards 2% target.
Markets understood the comments from BOC as hawkish signal and boosted expectations for another hike next month, offering more support to Canadian dollar.
Daily chart shows bears fully in play with rising negative momentum and MA’s forming a number of bear-crosses, aiming at key near-term supports at 1.3314/01 (May8 / Apr 14 lows) break of which to open way towards pivots at 1.3224/1.3190 (Fibo 38.2% of 1.2006/1.3977 / Nov 15 low / weekly Ichimoku cloud base) which also mark the floor of larger range since November.
Oversold conditions on daily chart warn of possible headwinds on approach to 1.3320/00 zone, with limited upticks to be capped under 1.3460 lower top and offer better selling opportunities.
Res: 1.3396; 1.3460; 1.3480; 1.3510.
Sup: 1.3320; 1.3301; 1.3262; 1.3224.