USD/CAD Exchange Rate Prediction – The Loonie Weakens Ahead of BOC Meeting
USD/CAD surged higher on Tuesday, reversing through two resistance levels as U.S. Treasury yields surged. The dollar gained against most major currencies. The exchange rate broke through key resistance after falling through support on Friday in the wake of the softer than expected U.S. jobs report. The Bank of Canada is scheduled to meet on Wednesday and is expected to leave rates unchanged.
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Technical Analysis
ON TUESDAY, the USD/CAD rallied sharply, pushing through former resistance now support near the 10-day moving average at 1.2593. Additional support is seen near the 50-day moving average at 1.2559. Short-term momentum has turned positive. The fast stochastic generated a crossover buy signal in oversold territory. Medium-term upward momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This situation occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line).
The Bank of Canada is scheduled to determine monetary policy on Wednesday and expectations are for the central bank to make no move. Growth has decelerated and contracted in Q2. The Bank of Canada has also predicted that the Canadian economy might have slowed in July.