USD/CAD Daily Forecast – Canadian Dollar Fails To Gain More Ground After BoC Decision

Canadian Dollar Is Mostly Flat Against U.S. Dollar

USD/CAD is currently trying to settle back above 1.2650 while U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index is testing the support level at 96. In case this test is successful, the U.S. Dollar Index will move towards the next support at 95.75 which will be bearish for USD/CAD.

Today, foreign exchange market traders focused on the Bank of Canada Interest Rate Decision. BoC left the interest rate unchanged at 0.25%, in line with the analyst consensus.

BoC noted that “recent economic indicators suggest the economy had considerable momentum into the fourth quarter”. BoC also stated that it expected that CPI inflation would remain elevated in the first half of 2022. However, CPI inflation is expected to decline towards 2% in the second half of 2022.

BoC statement was not hawkish, and the U.S. dollar made an attempt to rebound against Canadian dollar despite continuation of the rally in the oil markets. WTI oil managed to settle above the $72 level and is currently trying to get above $72.50. In case this attempt is successful, WTI oil will move towards the 20 EMA at $73.35 which will be bullish for commodity-related currencies, including Canadian dollar.

Technical Analysis

USD to CAD is currently testing the resistance level at 1.2650. In case this test is successful, USD to CAD will move towards the next resistance level at 1.2680.

A move above 1.2680 will push USD to CAD towards the resistance which is located at the 20 EMA at 1.2695. In case USD to CAD gets above the 20 EMA, it will move towards the resistance at 1.2710.

On the support side, the nearest support level for USD to CAD is located at 1.2625. A successful test of this level will open the way to the test of the next support at the 50 EMA at 1.2615. In case USD to CAD declines below the 50 EMA, it will head towards the support level at 1.2590.

For a look at all of today’s economic events, check out our economic calendar.