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USD/CAD bulls seeking upside from third downside test

  • USD/CAD trades towards the highs as greenback corrects.
  • BoC gave little attention to the price of the currency.

USD/CAD is currently trading at 1.2816, travelling between 1.2769 and 1.2833.

The Canadian dollar was little changed on the day despite the range, coming to a close on Wall Street towards the highs for the day. 

The Bank of Canada gave less attention to recent gains for the currency than some investors expected and left its key interest rate unchanged at 0.25%.

”The Bank of Canada did not rock the boat at the December meeting, with no change to the overnight rate or QE, and no material change to forward guidance,” analysts at TD Securities explained.

”The Bank struck a balanced tone on recent developments, downplaying both the weaker-than-expected Q3 GDP numbers and the stronger recovery in CPI.”

Meanwhile, it’s more about the greenback and also Europe for this week.

Last Friday, the greenback fell to a 2-1/2-year low against a basket of major currencies as optimism that a COVID-19 vaccine will boost the global economy next year reduced demand for safe-haven assets.  

The US dollar, however, has been correcting this week:

Looking to the  European event risk now, especially on the eve of the European Central Bank and the ongoing Brexit negotiations, the high beta currencies, such as the CAD, will likely respond to how stock markets perform on the developments. 

USD/CAD technical analysis

Meanwhile, from a technical perspective, further to the prior day’s analysis, the upside break has not yet come.

Instead, the bears have made a third attempt at the downside:

 

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