CANADA: EURCAD Respects Trendline Resistance Ahead of BOC
Last updated at:Jun-04 13:47By: Jack Lewis
Canada
- Despite the broad dollar weakness on Monday, USDCAD has remained resilient and trades around 0.35% higher on today’s session. Sharp downward pressure on crude futures will be adding headwinds to the CAD, with WTI extending the week’s decline to around 5.5%.
- Strong support around the 1.3600 handle keeps a bull trend intact for USDCAD ahead of tomorrow’s BOC decision, where the central bank is expected to initiate monetary easing.
- While reservations remain, soft inflation & growth data make too compelling an argument for cuts. It is likely the Bank begin their easing cycle with a 25bps rate cut, but make clear that back-to-back easing is unlikely. Our full preview is here.
- With the ECB also taking place this week, we recently noted EURCAD had broken above a cluster of highs around 1.4780. Exponential moving averages are also in a bull mode position and the cross printed as high as 1.4895, a fresh 6-month high. This closely respects the downtrend line from the July 2020 highs (shown below).
- Separately, 1.3748 marks the first resistance point for USDCAD, a Fibonacci retracement level. However, a stronger resumption of gains for USDCAD would refocus attention on the bull trigger at 1.3846, the Apr 16 high.
