The Greenback is on the march against the forex majors, led by intraday gains in the USD/CAD and USD/CHF. Sub-$60.00 crude oil hasn’t done any favors for the Canadian dollar, prompting a possible extension of yearly losses against the USD. Are we looking at fresh 2019 highs for the Loonie by Friday’s closing bell?

New yearly highs are a definite possibility. With the crude oil inventories cycle on deck and Friday’s U.S. Q1 GDP report, a rally above 1.3520 may be in the cards. However, the Wednesday session brings the BoC Interest Rate Decision. Rates are expected to be held static at 1.75%. This projection is largely due to relatively stagnate Canadian economic performance.

Regardless of the outcome, any surprises from the BoC will send the USD/CAD reeling in the short-term.

USD/CAD: Technical Outlook

The daily technical forecast for the Loonie is complicated. First, we have a strong intraday uptrend to deal with, fueled by mass bidding in response to lagging WTI crude. Second, rates are firmly within the defined compression zone between 1.3500 and 1.3400. While today’s bullish action is strong, the USD/CAD cannot seem to exit May’s value area.

Here are a few levels to watch as the Bank of Canada prepares to issue its interest rate statement:

• Resistance(1): Psyche Level, 1.3500
• Resistance(2): 78% Weekly Retracement, 1.3532
• Support(1): Bollinger MP, 1.3451
• Support(2): Daily SMA, 1.3445

Bottom Line: If we see a dovish BoC tomorrow, the USD/CAD may be tempted to break out above 1.3500 and test the 78% Weekly Retracement (1.3532). Should this scenario develop, a short trade from Fibonacci resistance is likely to come into play.

Until elected, I will have sell orders queued up from 1.3524. With an initial stop loss at 1.3556, this trade produces 25 pips on a slightly sub-1:1 risk vs reward management plan.