The Canadian dollar has been under pressure in the recent days and continued to slide on Wednesday, with the USDCAD pair trading 0.40% higher during the London session, hovering around 1.2920.
Later in the day, Canadian trade balance is projected to slightly improve, with the deficit expected to print 2.5 billion CAD, up from -3.2 billion CAD previously. Additionally, labor productivity is seen improving month-on-month.
However, the most focus will be on today’s Bank of Canada decision. The BoC should leave the main rate unchanged at 1.25%, with investors waiting for the following statement, which might be slightly more dovish this time. Should this happen, the CAD could be undermined.
The pair managed to get beyond the strong horizontal resistance of previous highs at 1.29, which confirmed the bullish bias. The next target for bulls is at the psychological level of 1.30 and if not held, further rise toward 1.3050 might occur.
On the other hand, should the 1.29 support crack, the Canadian dollar might strengthen to the 1.28 level. Volatility is expected to be elevated today, mainly after the BOC event. In all cases we strongly recommend to have rigorous money and risk management.
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