I’ve got my eye on this USD/CAD triangle pattern ahead of today’s BOC decision.
Is it gonna be a bounce or breakdown for this one?
Before moving on, ICYMI, yesterday’s watchlist checked out a range support test on EUR/NZD on upbeat eurozone data. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
China, Hong Kong, and Singapore markets still out on bank holidays
U.S. Dec flash manufacturing PMI up from 46.2 to 46.8 vs. 46.0 forecast
U.S. Dec flash services PMI up from 44.7 to 46.6 vs. 45.3 estimate
API reports larger than expected private oil inventory build
North Korean capital of Pyongyang enters 5-day lockdown
New Zealand CPI down from 2.2% to 1.4% q/q in Q1 vs. 1.3% consensus
Australia’s CPI rose from 1.8% to 1.9% q/q in Q1 vs. 1.6% estimate
Australian trimmed mean CPI dipped from 1.9% to 1.7% q/q in Q1 vs. 1.5% forecast
New Zealand credit card spending slowed from 16.2% to 12.4% y/y in Dec
U.K. PPI input prices slipped by 1.1% m/m in Dec vs. projected 0.8% decline
U.K. PPI output prices down by 0.8% m/m in Dec. vs. estimated 0.1% uptick
Upcoming Potential Catalysts on the Forex Economic Calendar:
BOC monetary policy statement at 3:00 pm GMT
EIA crude oil inventories at 3:30 pm GMT
BOC press conference at 4:00 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
What to Watch: USD/CAD
Which way will the BOC decision take the Loonie today?
USD/CAD is hanging out at the very bottom of its symmetrical triangle pattern, still deciding whether to make its way back to the top or go for a break lower.
Technical indicators are giving mixed signals, with moving averages pointing to a bearish move and Stochastic hinting at a potential rally.
I’m also seeing a bit of a bullish divergence, as the oscillator made higher lows while the pair is forming lower lows.
A bounce could take USD/CAD to the triangle resistance at the 1.3600 major psychological mark while a breakdown could set off a drop that’s the same height as the chart pattern.
Of course it could all boil down to the BOC announcement, as the central bank is widely expected to deliver another 0.25% interest rate hike.
Fresh economic forecasts are also on the docket, and these would likely provide better clues on what policymakers are planning for the next few months.
Some predict that the BOC could either downgrade inflation forecasts or even decide to pause with their tightening this time, as the country is also dealing with a shaky housing market.
In any case, watch out for additional USD/CAD volatility during the announcement and press conference!
