USD/CAD erases losses and bounces to the upside

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 20, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Córdoba) - USD/CAD plummeted after the decision of the Bank of Canada to leave monetary policy unchanged. The pair bottomed at 1.4488 but quickly bounced back to the upside, rising above 1.4600, to the level it had before the decision.

    The pair climbed toward the 1.4650 area, that capped the latest rally and then pulled back toward 1.4580/90. Earlier, on Asian hours it reached at 1.4691, a 13-year high.

    Bank of Canada gains erased

    The loonie rose across the board after the decision but it has erased all gains that were achieved after the BoC statement. Risk aversion and the continuation of the decline in crude oil prices that during the last hour reached fresh decade lows at $26.98 weakened the Canadian dollar again. The barrel is falling today more than 5% while main stocks indexes in the US are down by 2.5%.

    Despite the failure to consolidate gains triggered by the decision of the BoC not no cut rates, the loonie still is the best performer among commodity currencies on Wednesday. AUD/CAD is falling modestly after hitting yesterday 2-week highs while NZD/CAD is hovering around 0.9320 after ending on Tuesday above 0.9400.

    USD/CAD levels

    For the coming hours, resistance levels might be seen at 1.4620 (20-hour MA), 1.4645/50 (American session high) and 1.4690 (daily high). On the downside, support could be located at 1.4550 (Asian session low), 1.4490 (daily low) and 1.4430 (Jan 19 low).
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