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6 March 2024,03:47

Trading BlogTrading Knowledge

Trade Of The Day: Loonie Weakens Ahead of BoC Rate Decision

6 March 2024, 03:47

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USD/CAD Holds Steady in Anticipation of BoC Interest Rate Decision 6 March 2024

Fundamental Analysis

  • BoC Buzz: USD/CAD surges to a three-month high following a gloomy market sentiment while market participants waiting for Bank of Canada’s interest rate call which will be announced on Wednesday. The Bank of Canada is anticipated to maintain the current interest rate at 5% for the fifth consecutive time. As of now, the market sees just a 19% probability for an unexpected rate cut. Therefore, attention will shift towards forthcoming decisions and communication regarding future monetary actions. 

Technical Analysis

  • Technical Breakout: USDCAD was traded higher and currently steadied around 1.36000 levels. MACD which indicate bullish momentum signal with golden cross coupled with bullish trend suggest the pair could extend its gains towards the next level. 

  • Resistance and Targets: Should the bullish momentum persist; the price would head towards the subsequent resistance level 1.3630 and a breakout above the level could result in a potential upward movement. However, the price may also experience a technical retracement. A breach below the support level 1.35545 indicates a potential reversal in the price trend. 

Get more information on how you can analyse signals using chart patterns and technical analysis.

Potential Risks

As traders await additional signals from the Bank of Canada (BoC), they are also factoring in developments from the U.S. The impending testimony of Federal Reserve (Fed) Chair Powell before the Senate Banking Committee on Wednesday is expected to be under scrutiny. Should Fed officials express a hawkish note, it has the potential to strengthen the U.S. Dollar, presenting a hurdle for the USD/CAD pair. 

Read some of the risk management strategies to help you in managing potential trading risks.


Stay updated on BoC news, data from Canada, and any shifts in the US Dollar’s strength by following our daily financial news or market insights articles.

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