USD/CAD Remains Down After BOC Keeps Rates on Hold Again

USD/CAD has resumed the downtrend this week after turning bullish last week and has declined below moving averages once again on the H1 chart, with the help of the USD. The Canadian dollar (CAD) weakened slightly after the BOC rate decision, sending this pair higher and retest the 200-hour moving average at around 1.34800. However, sellers prevented the price from rising above this MA, and it reversed back down again.

Currently, this forex pair is trading at 1.3450s, just above the day’s low of 1.3432. Sellers still have control as long as the price remains below the 200-hour moving average (green line) and the 100-hour moving average (blue line) at 1.34916. To shift the bias to the upside, the price would need to move above both moving averages.

The next downside target is 1.34251, which was the session low on April 5. Buyers may look to buy the dip at this level, hoping for more CAD sellers. However, buyers would need to push the price above the 200-hour and 100-hour moving averages to gain more control. If the price falls below 1.3430, traders will likely target the low from earlier this month at around 1.34. The rising 200 SMA on the daily chart at 1.33921 is another key support target below that.

Bank of Canada Interest Rate Decision April 12

• Overnight rate vs 4.50% prior
• Governing Council continues to assess whether monetary policy is sufficiently restrictive to relieve price pressures and remains prepared to raise the policy rate further if needed to return inflation to the 2% target.
• 2023 GDP forecast 1.4% vs 1.0% prior
• 2024 GDP forecast 1.3% vs 1.8% prior
• Sees 2.5% GDP growth in 2025
• “Economic growth in the first quarter looks to be stronger than was projected in January, with a bounce in exports and solid consumption growth”
• Monetary Policy Report projects global growth of 2.6% this year, 2.1% in 2024, and 2.8% in 2025
• Previously forecast inflation would fall to around 3% in the middle of 2023 and back to target in 2024
• Inflation in many countries is easing
• Labour markets remain tight and measures of core inflation in many advanced economies suggest persistent price pressures, especially for services.
• Global economic growth has been stronger than anticipated
• US growth is expected to slow considerably in the coming months
• Full text of the MPR

The market was pricing in a 95% chance of no change at today’s meeting and all economists in the Reuters survey forecast no move.

USD/CAD Live Chart