INSIGHTS

Steve Miley

Thu, Oct 31


USD/CAD risks stay higher as Bank of Canada sees contagion threat

USD/CAD risks stay higher as Bank of Canada sees contagion threat

*  The Bank of Canada left rates unchanged on Wednesday 30th October, but highlighted concerns of a global economic slowdown contagion.

*  This signals risk of a possible rate cut going forward, which sent the Canadian Dollar lower, with USDCAD surging higher.

*  Despite broad US Dollar weakness coming through after the anticipated US Fed rate cut Wednesday, the threat for USDCAD remains to the upside.

USD/CAD Technical View

A USDCAD surge Wednesday after the Bank of Canada and FOMC interest rate decisions above 1.3146 and 1.3182 resistance built on Tuesday’s rally above 1.3075, to keep risks to the upside Thursday.

The early September plunge below 1.3221 after the Bank of Canada interest rate decision back in September, shifted the intermediate-term outlook to bearish.

For Today:

*  We see an upside bias for 1.3175/77; break here aims for 1.3208/12, maybe 1.3240 and 1.3294.

*  But below 1.3131 opens risk down to 1.3101/00 and maybe towards 1.3071.

 Intermediate-term Outlook - Downside Risks: We see a downside risk for 1.3010/00.

*  Lower targets would be 1.2795 and 1.2527.

 What Changes This? Above 1.3383 shifts the intermediate-term outlook straight to an intermediate-term bull theme.

 

See more EUR/USD commentary from Steve Miley on FXExplained.co.uk.


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