USD/CAD: Bank of Canada’s interest rate cut does not affect the market
| Scenario | |
|---|---|
| Timeframe | Weekly |
| Recommendation | BUY STOP |
| Entry Point | 1.3895 |
| Take Profit | 1.4060 |
| Stop Loss | 1.3850 |
| Key Levels | 1.3610, 1.3810, 1.3890, 1.4060 |
| Alternative scenario | |
|---|---|
| Recommendation | SELL STOP |
| Entry Point | 1.3805 |
| Take Profit | 1.3610 |
| Stop Loss | 1.3900 |
| Key Levels | 1.3610, 1.3810, 1.3890, 1.4060 |
Current trend
Amid the weakening of the American dollar, the USD/CAD pair is correcting at 1.3853.
The Canadian currency remains under pressure despite the easing of monetary policy by the Bank of Canada: the overnight target rate is now 3.25%, the bank rate is 4.00%, and the deposit rate is 3.75%. According to officials, the unemployment rate will be 6.5% in the second half of the year, and the economic growth rate will slow from 2.00% to 1.75%. The adjustment in the cost of borrowing should stimulate its recovery, and now, the gross domestic product (GDP) in 2024 may reach 1.2%, gradually strengthening to 2.1% in 2025 and 2.3% in 2026. Inflation returned to the target range below 2.0%, amounting to 1.6%, allowing the regulator to adjust the interest rate by –50 basis points. As long as the consumer price index remains within these limits, the bank will focus on economic growth.
The American dollar is holding at 103.80 in the USDX, having fallen amid poor September data on the real estate sector, the most lagging sector of the national economy. Building permits fell from 4.6% to –3.1% or from 1.470M to 1.425M but new home sales increased from 709.0K to 738.0K, a high for the year, which did not have a significant impact on the situation.
Support and resistance
On the daily chart, the trading instrument is correcting, returning to the ascending channel with dynamic boundaries of 1.4000–1.3620.
Technical indicators strengthen the buy signal: the EMA oscillation range on the Alligator indicator is expanding, fast EMAs are moving away from each other, and the AO histogram is forming correction bars, retreating from the upward transition level.
Resistance levels: 1.3890, 1.4060.
Support levels: 1.3810, 1.3610.
Trading tips
Long positions may be opened after the price rises and consolidates above 1.3890, with the target at 1.4060. Stop loss is 1.3850. Implementation period: 7 days or more.
Short positions may be opened after the price falls and consolidates below 1.3810, with the target at 1.3610. Stop loss is 1.3900.
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