USD/CAD Declines Following Bank of Canada Rates Hike to 2.5%
- Near 1.3080, USD/CAD encountered sellers and corrected lower.
- GBP/USD and EUR/USD both corrected up a few points.
- Interest rates were increased by the Bank of Canada from 1.5 percent to 2.5 percent.
- In June 2022, the US Consumer Price Index rose by 9.1%. (YoY).
Technical Analysis of USD/CAD
Against the Canadian Dollar, the US dollar tried to break out to the upside above the 1.3080 resistance. USD/CAD, however, was unable to overcome the 1.3080 resistance and fell.
The pair formed a high near 1.3083 on the 4-hours chart before a bearish pullback. In addition, it appears that the pair may develop a double top pattern close to the 1.3080 resistance region.
Price had a sudden drop and fell below the 50% Fibonacci retracement level of the upward movement from the 1.2836 swing low to 1.3083 high.
A significant support on the downside is located close to the 1.2930 area. On the same chart, a connecting bullish trend line with support close to 1.2925 is also visible. The pair may fall toward the 1.2850 level if there is a negative break.
The pair is running into resistance in the 1.3000 area on the upside. The main obstacle is located around about 1.3080.
The pace for a move towards 1.3150 might be set by a decisive move over the 1.3080 region. Any further gains might pave the way for a move in the direction of the 1.3220 resistance.
Regarding the EUR/USD pair, it corrected a few points higher after finding support close to the parity level. Similar to the GBP/USD, the upsides may be constrained.
Economic Release to Trade Today
- US initial jobless claims are predicted to be 235K, up from the previous 235K.
- US Producer Price Index for June 2022 (YoY): Forecasted at +10.7% vs. +10.8% in the prior month.
Author: Amogo Solomon
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