The Bank of Canada (BOC) is the first central bank to announce its monetary policy decision this week. The other one is the European Central Bank one day later.
Both central banks are expected to lead the way to taper and removing the easy monetary conditions. Also, both central banks have a difficult mission ahead, as both the euro and the Canadian dollar are close to their pandemic highs.
The USDCAD daily chart shows one of the clearest bearish trends in years. The market started its decline after the price of oil recovered after it settled below zero for the first time in history. Since then, the CAD never looked back, constantly gaining against the USD, on ongoing oil price’s strength.
It paused recently at the 1.20 level, but the BOC decision to taper should bring more strength for the Canadian dollar. Unless we see some surprising news that may impact the price of oil, such as a possible Iranian deal, the USDCAD looks poised to break the 1.20 support.
USDCAD Technical Analysis
Aggressive bulls may want to buy against dynamic support and target a move back to dynamic resistance at 1.24. For this, they need a stop at 1.19, so as to build a proper risk-reward ratio.