USD/CAD Extends Bearish Series, RSI Comes Up Against Trendline Support


USD/CAD extends the decline from earlier this week even though U.S. Durable Goods Orders unexpectedly climb 0.4% in January, and recent price action keeps the downside targets on the radar as the exchange rate continues to carve a string of lower highs & lows.

Image of daily change for major currencies


Image of daily change for usdcad rate

The USD/CAD rally following the Bank of Canada (BoC) meeting continues to unravel as recent data prints coming out of the U.S. economy do little to alter the monetary policy outlook, and recent pullback in the exchange rate may continue to unfold over the next 24-hours of trade as the economic docket remains fairly light for the remainder of the week.

In turn, USD/CAD may continue to consolidate ahead of the Federal Reserve interest rate decision on March 20 as the central bank is widely expected to keep the benchmark interest rate in its current range of 2.25% to 2.50%, and the wait-and-see approach by both the BoC and the Federal Open Market Committee (FOMC) may foster range-bound conditions for the dollar-loonie exchange rate amid the shift in forward-guidance.

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Recent comments from BoC Governor Lynn Patterson suggest the central bank will continue to change its tune at the next meeting on April 24 as ‘it now appears the economy will be weaker in the first half of 2019 than we had projected in January,’ and Governor Stephen Poloz & Co. may ultimately follow its U.S. counterpart and look to abandon the hiking-cycle as ‘it will take time to gauge the persistence of below-potential growth.’ With that said, similar comments from Senior Deputy Governor Carolyn Wilkins may rattle the recent strength in the Canadian dollar, and the broader outlook for USD/CAD remains constructive following the break of the June-high (1.3386) as the exchange rate stages a near-term breakout after bouncing along the 200-Day SMA (1.3137).

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