The USDCAD currency pair is enjoying a bearish trading session despite the BoC’s decision to keep the cash rate unchanged in June as the cooler-than-expected inflation data from the US continued to weigh on the dollar. The BoC decided to keep the interest rate at 5%, which was widely expected as the central bank allowed itself enough time to gauge the reactions to its recent rate hikes.
The cross closed Wednesday’s trading session 0.33% in the red as the US inflation rate and the core inflation rate for June cooled to 3% and 4.8%, respectively, against the market’s expectations of 5% and 3.1%. The cool inflation data coincided with the recent Fed members’ remarks that the Fed’s current monetary policy tightening might be coming to an end, weighing on the greenback.
The 4H chart shows that a push below the 78.60% Fibonacci retracement level would likely find significant support at the demand zone (red rectangle), which could act as a level of interest for the market. A push below the zone would bring the 1.31166 and 1.30746 support levels firmly into play.
However, rejection of the level would leave the golden ratio and the supply zone to provide significant resistance to the bulls’ charge. A push above the zone would confirm the bullish sentiment, leaving the 1.32470 and 1.33041 resistance levels firmly within the bulls’ reach.
The cross is under firm bearish pressure ahead of the US PPI data due later today, despite the BoC’s decision to hold the cash rate steady, and the bulls’ could be hoping the incoming data could help give some reprieve in the short term.
Source: TradingView, Reuters.
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