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Loonie Today after the volatile bout

Market Analysis

USDCAD, H1

USDCAD has settled today after a volatile bout yesterday, with the pairing having steady at near net unchanged levels near 1.2450 relative to levels that were prevailing just ahead of yesterday’s BoC rate hike. The 25 bp hike met expectations, and was accompanied with cautious guidance that reaffirmed the central bank’s gradual normalization reflects ongoing uncertainties, notably the NAFTA renegotiation. Another two more 25 bp rate hikes expected this year, in July and October. Focus will remain on the NAFTA front, with uncertainty about this having curtailed the Canadian dollar rallying amid the surge in oil prices.

As a consequence of the retention of a cautious approach, loonie sloped lower to 1.2370. Today however is seen returning back to mid 1.24s , back in the consolidation mode seen the last 3 days. The pair is seen closing at the mid 1.24s since Tuesday, while along with the long legged Doji candle yesterday, suggests that uncertainty strong holds. Hence the next Daily candles will give a sign for the direction of the loonie from downwards.

Intra-day , significant is the fact that despite the large volatility seen yesterday, the pair manage to hold above 4 months low at 1.2350. This could be consider as a strong support level. Hence only a break below that could confirm a potential downwards movement for the USDCAD. In an even tighter timeframe, such as the Hourly chart, the instrument is seen bouncing between 50 and 200-period EMA, since overnight recovery. The 50-period MA coincides with 20-period MA at 1.2440, which consider be a short-term support area. Meanwhile the 200-period EMA, at 1.2470, could be consider as the short term resistance level. Hence any break above this resistance area, would suggest a retest of the 1.25301.2550 area, while a break below the support area, could suggest a retest of the 1.2350 level.

Intra-day Momentum indicators remain down, with only Stochastic giving some signals of recovery. Daily Momentum indicators are low as well, however they hold above oversold territory since last week.

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Andria Pichidi

Market Analyst

HotForex

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