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USD/CAD Dips After BoC Raises Rates To 2.5%

Aayush Jindal

Aayush Jindal

Key Highlights

  • USD/CAD faced sellers near 1.3080 and corrected lower.
  • EUR/USD and GBP/USD corrected a few points higher.
  • The Bank of Canada raised interest rates from 1.5% to 2.5%.
  • The US Consumer Price Index increased 9.1% in June 2022 (YoY).

 

USD/CAD Technical Analysis

The US Dollar attempted an upside break above the 1.3080 resistance against the Canadian Dollar. However, USD/CAD failed to clear the 1.3080 barrier and corrected lower.

Looking at the 4-hours chart, the pair formed a high near 1.3083 before there was a downside correction. Besides, it seems like the pair might form a double top pattern near the 1.3080 resistance zone.

There was a sharp decline and the price dipped below the 50% Fib retracement level of the upward move from the 1.2836 swing low to 1.3083 high.

On the downside, there is a key support sitting near the 1.2930 zone. There is also a connecting bullish trend line with support near 1.2925 on the same chart. If there is a downside break, the pair could decline towards the 1.2850 level.

On the upside, the pair is facing resistance near the 1.3000 zone. The main hurdle is near the 1.3080 level. A clear move above the 1.3080 zone could set the pace for a move towards 1.3150. Any more gains may perhaps open the doors for a move towards the 1.3220 resistance.

Looking at EUR/USD, the pair found support near the parity level and corrected a few points higher. Similarly, GBP/USD spiked higher but upsides could be limited.

Economic Releases

  • US Initial Jobless Claims - Forecast 235K, versus 235K previous.
  • US Producer Price Index for June 2022 (YoY) – Forecast +10.7%, versus +10.8% previous.