USD/CAD is on a consolidation pattern as investors look for further cues from the Fed interest rate decision and Canada’s retail sales data. The Canadian dollar has been strengthening against the US dollar for over a week now after the BoC interest rate decision.
While it maintained interest rates at 0.25%, the Canadian central bank became the first to taper its bond purchases. It has lowered its weekly QE program from C$4 billion to C$3 billion.
In today’s session, USD/CAD will be reacting to the Canadian retail sales. Analysts expect a reading of 4.0% MoM, up from the previous -1.1%. Besides, with the US being Canada’s major trading partner, the focus is on the FOMC Statement later in the day.
USDCAD Technical Outlook
USD/CAD is on a consolidation pattern for the third consecutive session. Over the past one week, the pair has dropped from 1.2653 to the current 1.2406. The Canadian dollar has been strengthening against the US dollar after the Bank of Canada became the first central bank to taper its bond purchases.
On a 2-hour chart, USD/CAD is trading below the 25 and 50-day exponential moving averages. Besides, it has formed a bearish flag. The pair is likely to rise to 1.2421 before dropping further to find support at 1.2400. Below that level, the next target will be 1.2366; its lowest level since 18th March. However, this thesis will be invalidated by a move above 1.2433.