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Move higher today erases the decline after the BOC decision this week
The USDCAD remains mired in the trading range that has the pair moving up and down since October 14. The high of the range over that time comes in at 1.24334. The low reached 1.2287. This week the high reached 1.24308 - just a few pips from the 1.24334 range high. The low for the week reached 1.22992 - around 12 pips short of the range low.
Fundamentally this week, the Bank of Canada announced that they would stop bond buying which was more hawkish than expectations. In addition, they said that they expect to tighten in the middle two quarters of 2022 (vs the 2nd half of 2022 previously). That is also more hawkish.
That news sent the CAD higher (the USDCAD lower) on Wednesday. The price moved from 1.2406 to the week’s low at 1.22992.
Since then, the price action saw the pair move above its 200 and 100 hour moving averages yesterday, but the price rotated lower and close below those moving averages at the end of day on Thursday.
Today, however, the overall rise in the USD helped to push the price back above those moving averages (the 200 is at 1.23558 while the 100 is at 1.23713). The price has been able to stay above the 100 hour moving average of the last five trading hours and the high has pushed up to 1.24069 – right near the level before the BOC decision (at 1.2406). That level was also just short of the swing high going back to October 18th at 1.24089. A downward sloping trendline is a few pips higher than that level.
Sellers had their shot on Wednesday with fundamental news to support the move. The dollar buying today, has forced the USDCAD sellers (CAD buyers), to buy on the technical break above the 200 and 100 hour moving averages.
Going forward and into next week, the the 100 and 200 hour moving averages will remain a bias defining area. Move below would be more bearish. Stay above would be more bullish.
On the topside, with the pair stalling right near the level right before the Bank of Canada decision at 1.2406, getting above that level would be step one followed by extending above the trading range since October 14 at 1.24334.