The Bank of Canada widely telegraphed to cut its Overnight Rate by 25bps today at 1345GMT. We find it interesting that USDCAD has thus far failed to price in the move having been stuck in a consolidation the past two months. Should the BoC proceed with the expected cut we will be looking for a test of the April High, while failure to do so opens the possibility of taking out the two month lows.
Resistance
- 1.37831 – May High
- 1.37344/433 – Daily Highs
- 1.36988 – Yesterday’s High
Support
- 1.36683 – Intraday Consolidation Low
- 1.36202 – Intraday Consolidation Low
- 1.35898 – May Range Trade Low
USDCAD has been forming a descending triangle for the past two months with consistently lower highs in its every swing as the base at 1.35898 develops into a strong support. In the context of its consolidation we see a dead cross among the moving averages, another hint of a possible bearish turn around. With a long wick at the top of its upswing in 4H charts, our bias is for a break of the immediate support at 1.36683 to test the key level 1.35898 the descending triangle breakout point. That said a rate cut by the BoC is likely to see us breaking higher for a test of the April Highs, 1.38456.
