USD/CAD has been trading in a range for some time, with the top just above 1.32 and the bottom of the range at around 1.3075, after pushing above 1.30 last month, bouncing above the range several times. Earlier this week buyers were testing the resistance zone but they failed and this pair reversed lower again, now trading above the support.
USD/CAD H1 Chart – Trading in A range
Will sellers push the price below the support?
This is an important zone and Scotia Bank analysts suggest 1.3075 is the key level to watch in USD/CAD. They say that while the US dollar is holding in a short-term range it does look “overbought.” This would send USD/CAD below this support zone and probably below 1.30 as well.
Yesterday the Bank of Canada raised interest rates by 75 bps, but unlike the USD which is running higher on such hikes, the CAD is not benefiting from rate hikes. Although it did turn bullish after comments from BOC members that they will keep up the pace.
Bank of Canada’s Senior Deputy Gov. Carolyn Rogers
- We are not where we were in July, but we are a long way from where we need to be
- Bank has seen early signs monetary policy is working
- the bank still sees a path to a stop to soft landing, that’s still our objective
- neutral territory is a range, it’s an estimate, there is no magic formula
There has been a lot of central banks speak from the Swiss National Bank to the FED to the ECB, and now additional comments from the Bank of Canada. So, the comments are somewhat losing effect on the currencies, but the CAD did benefit, so perhaps it will keep the momentum, especially if the USD softens up.