The Bank of Canada (BOC) is set to meet tomorrow, with the majority of market participants expecting no change in monetary policy. Adam highlights that there is an 11% chance of a 25 basis point hike, while the rest foresee no change. The current target rate stands at 4.5%. Last month, the central bank maintained its rates following a conditional pause announced on January 25.
In contrast, market expectations for the US Federal Reserve suggest a 74% chance of a 25 basis point hike in May. Despite these expectations, the USDCAD is trading lower today. Technically, during the early North American session, the currency pair has fallen below the 100 and 200-hour moving averages at 1.3492 and 1.3487, respectively. The current price is at 1.3480 after touching a low of 1.34686.
If the price remains below the 100/200 hour moving averages, sellers will maintain control. However, a move back above should trigger short-covering.
The next downside target for sellers is 1.34569, followed by 1.3425 and last week's low of 1.34051. The 200-day moving average lies at 1.33901.
On the other hand, if the price can reclaim the hourly moving averages, a break above the day's high would shift focus towards the 100-day moving average at 1.35260. A move above this level would target yesterday's high at 1.3553, the 38.2% retracement of the decline from the March 24 high at 1.35574, and the swing area between 1.3553 and 1.35638.
For now, the sellers are making a play below the hourly moving averages and more in control.