USD/CAD Declines Following Bank of Canada Rates Hike to 2.5%

Key Take-Aways

  • 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.
Amogo Solomon is a Broker-Dealer/Market Research analyst and writer in ACT Brokers with a background in Computer Science, Data Analytics, and Forex Broker Dealing. He specializes in Forex Dealing, markets Analysis, Currency research, forex fundamental and technical analysis, and Monitoring of Forex trends, Stocks, Equities, Cryptos, and Commodities. He possesses strong technical and analytical skills and is well known for his entertaining and informative analysis of the global economy, fiat currency, commodities, Stocks, Indexes, Futures, and Options markets. He held a Bachelor's degree in Computer Science and Nanodegree in Programming for Data Science Enterprise.