The BoC Rate Statement Caused a 140 Drop for USD/CAD

The Bank of Canada kept the interest rate as it was, which was expected, and that decision caused a big 140 pips drop on the USD/CAD charts. The pair even managed to fall below the strong support of the diagonal trendline that connects the last four lows since 23rd June. Eventually it reached 1.2935, but quickly retraced above the trendline again.

The drop, however, ended at the strong support at 1.2960 that can be seen on the daily, weekly and monthly time-frames, as well as at the diagonal trendline. In other words, we really need to keep this level in mind. If the pair succeeds in breaking below it and remains below 1.2950 we could expect it to continue falling towards 1.2850 -1.2800. For now it is unclear whether that will happen.

I, personally, would wait for a breakout below the diagonal trendline and a retracement back to the breakout before I open new short positions, but that is unlikely to happen today.

The Bank of Canada Kept the Interest Rate as It Is

The Bank of Canada announced today that it has decided not to change the interest rate and keep it at 0.50 and investors interpreted that as a good sign, which made all Canadian Dollar pairs start moving in favour of the Canadian currency.

When the news was announced USD/CAD fell with over 70 pips, which confirmed the trend reversal I have been expecting since yesterday.

EUR/CAD also fell with 90 pips and continues falling. I think the pair will keep moving to the downside, towards 1.4100 - 1.4050, which is a strong support level visible on the weekly time frame.

It is too early to say whether the pair will break below that level, because the monthly time frame is indicating a move to the upside, rather than to the downside. We will have to watch EUR/CAD carefully when it reaches that level.