How Will the BoC's Decision Affect the Currency Market?

FXOpen -

The USD/CAD pair has been strengthening for the third consecutive week and is currently approaching the upper boundary of the three-month range of 1.3850-1.3600. The strength of the pair's buyers is quite significant, which could lead to a consolidation above 1.3850 and a continued rise towards the psychological level of 1.4000. However, the news background for the upcoming trading sessions is so saturated that it could lead to either a strengthening of the current trends or the formation of reversal patterns:

  • today at 16:45 (GMT+3) the release of the US Services PMI for July;
  • today at 16:45 (GMT+3) the Bank of Canada’s interest rate decision;
  • today at 17:00 (GMT+3) the Bank of Canada’s press conference;
  • today at 17:00 (GMT+3) the release of US New Home Sales data for June.

Experts surveyed by Reuters suggest that the Canadian regulator will not only cut the rate by 0.25% at today’s meeting but may also announce two more rounds of rate cuts by the end of the current year.

Technical analysis of the USD/CAD pair indicates the possibility of further growth, as the “hammer” pattern formed on 11th July remains relevant on the daily timeframe. In the event of a rebound from 1.3850, a corrective decline to 1.3760-1.3730 is possible.