USD/CAD Tests 1.3650 Support Ahead of BoC Rate Decision
USD/CAD declined 0.3% to 1.3655, testing critical support at the ascending trendline from March lows ahead of today's Bank of Canada rate decision. Markets price in 65% probability of a 25bp rate cut to 4.50%, which could accelerate CAD weakness if materialized. The pair has traded in a 1.3600-1.3750 range for three weeks, with current price action suggesting potential breakdown. Oil prices supported CAD with WTI crude up 0.8% to $76.40. Technical indicators show RSI at 45, indicating neutral momentum, while the 200-day MA at 1.3620 provides additional support. A dovish BoC could propel USD/CAD toward 1.3750 resistance, while a hawkish surprise might trigger a break below 1.3600. Traders should monitor the BoC's forward guidance on future cuts, particularly given Canada's cooling inflation and sluggish GDP growth.
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