Hello traders,
Yesterday, Bank Of Canada has officially confirmed the 0.50% rate cut that was anticipated, moving to 3.75% from the previous 4.25%. The rate cut cycle for Canada started from June the 5th this year from the 5.00% rate mark. The dovish policy stance, mimics the ones we are seeing during the last 3-4 months from the EU, New Zealand and the U.S. if we will be seeing the Federal Reserve continuing with these cuts. In the FX market the USD/CAD rose by 3.30% since the lows from 25.09.2024, bringing the pair from the 1.34170 are up to the 1.38630 area following up yesterday’s rate decision.
On the technical outlook, the pair starts to show signs of potential stalling or weakness in the short term and it remains to be seen whether a pullback reaction might take place or whether the pair can create extensions and maintain the bullish momentum moving forward.
USD/CAD 4HR – Reached The 1.38530 – 1.39466 Area From 05.08.2024 Highs – RSI At A Decision Point
As we can observe the pair has reached a major area seen during early August, with the RSI suggesting that a decision should be made soon in terms of whether a reaction lower could take place or whether the pair can maintain the momentum and create extensions higher. A break below 50 in terms of the RSI should suggest a bearish view for the shorter term at least. The next reaction should determine whether the rate cut from BoC has been priced in during last month’s uptrend or whether the market should expect more rate cuts and in contrast less rate cuts by the U.S.
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