Canadian Dollar Forecast: USD/CAD Drops as BoC Holds Interest Rate
USD/CAD drops towards the monthly low (1.3829) as the Bank of Canada (BoC) keeps its benchmark interest rate at 2.75%.
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Canadian Dollar Outlook: USD/CAD
USD/CAD drops towards the monthly low (1.3829) as the Bank of Canada (BoC) keeps its benchmark interest rate at 2.75%, and the exchange rate stage further attempts to test the to test the November low (1.3821) as struggles to retain the advance from the start of the week.
Canadian Dollar Forecast: USD/CAD Drops as BoC Holds Interest Rate
The recent rebound in USD/CAD may turn out to be temporary as the exchange rate trades below the 200-Day SMA (1.4003) for the first time since October, and it seems as though the BoC is at or nearing the end of its rate-cutting cycle as the ‘Governing Council will continue to assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs.’
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In turn, the BoC may stick to the sidelines as ‘monetary policy cannot resolve trade uncertainty or offset the impacts of a trade war,’ and the weakness in USD/CAD may persist ahead of Canada’s federal election on April 28 as Governor Tiff Macklem and Co. endorse a wait-and-see approach.
With that said, USD/CAD may continue to trade to fresh yearly lows as it no longer trades within the February range, but the exchange rate may consolidate over the remainder of the week should it defend the monthly low (1.3829).
USD/CAD Price Chart – Daily
Chart Prepared by David Song, Senior Strategist; USD/CAD Price on TradingView
- USD/CAD appears to be stuck in a narrow range following the failed attempts to close below 1.3850 (50% Fibonacci extension), and the exchange rate may continue to consolidate as it struggles to push above the 1.3940 (61.8% Fibonacci retracement) to 1.4000 (61.8% Fibonacci extension) zone.
- Nevertheless, a close below 1.3850 (50% Fibonacci extension) may lead to a test of the November low (1.3821), with the next area of interest coming in around 1.3700 (38.2% Fibonacci extension) to 1.3710 (78,6% Fibonacci retracement).
- At the same time, a break/close above the 1.3940 (61.8% Fibonacci retracement) to 1.4000 (61.8% Fibonacci extension) zone may push USD/CAD towards 1.4110 (50% Fibonacci retracement), with the next area of interest coming in around 1.4210 (78.6% Fibonacci extension) to 1.4270 (38.2% Fibonacci retracement).
Additional Market Outlooks
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USD/JPY Defends Monthly Low to Keep RSI Above 30 for Now
Euro Forecast: EUR/USD Clears 2024 High to Push RSI into Overbought Zone
--- Written by David Song, Senior Strategist
Follow on Twitter at @DavidJSong
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