USDCAD Recovers as the BOC Holds Rates Steady

The US dollar which was on steep bullish decline for majority of April’18 saw slight bullish recovery post Bank of Canada’s announcement to keep interest rates unchanged. While this was a slight upset as due to few analysts declaring possible interest rate change based on Overnight rates, the gain in US dollar was not significant enough to upset existing bearish slide.

USDCAD Moves Higher

US dollar which was on Bull Run during early hours of the day has started moving back in bearish decline. Since US President Trump assumed position, the long negotiated Trans-Atlantic Trade & Investment partnership has gone to sleep and numerous sanctions, trade tariff’s laid by the Trump administration has caused lots of controversies and unrest among nations that were once close knit trade partners of US.

This ongoing trade wars from USA and Canada Prime Minister’s decision to forge new trade relationship with post Brexit United Kingdom and access other markets as potential trading allies to make Canada a better and independent functioning economy causing it to stop relying heavily on US trade relationship  and this has caused Canadian Dollar to gain strength. This is likely to continue in the short and medium term as well and the BOC would hope that it yields results in the coming months. With this in mind, the BOC has decided to hold the rates without any changes yesterday and this left a few traders disappointed and their selling of the CAD is the reason for the pair to move higher yesterday,

Since April 2017 Canadian dollar has gained nearly 9% over US dollar and US dollar continues to grow weaker in long term as day’s move forward. If existing trade wars don’t ease soon enough, we may see the US dollar decline further. We can see stiff support and resistance for USD in short term (next 30 trading sessions) at 1.221 & 1.311 and longer time frame (next 120 trading sessions) in a range of 1.203 & 1.360 respectively.