Current trend

The USD/CAD pair has been falling for the fourth session in a row, trading at 1.3200.

The Canadian dollar is strengthening its position against rising oil prices and the expected tightening of monetary policy by the Bank of Canada at today’s meeting. Officials are likely to hike interest rates by 25 basis points to 5.00% as the national labor market remains strong and inflationary pressures are significant, with the CPI up 3.4% YoY in May and the core CPI up 3.7%.

Unlike the Canadian regulator, the further actions of the US Federal Reserve remain uncertain, which puts pressure on the US currency. In June, the interest rate remained at 5.25%, but the officials allowed its growth to resume in July. However, the publication of the latest economic statistics may cause a pause in the tightening of monetary policy: the increase in employment in the country in June slowed down sharply to 209.0K, and inflation, according to forecasts, may also reach 3.1% and core inflation 5.0%.

Support and resistance

The trading instrument is close to 1.3183 (Murrey level [0/8]), a breakdown of which allows it to reach 1.3122 (Murrey level [–1/8]) and 1.3061 (Murrey level [–2/8]). The key “bullish” level is 1.3305 (Murrey level [2/8], the upper line of Bollinger bands), in case of consolidation above which the quotes can rise to 1.3427 (Murrey level [4/8]) and 1.3488 (Murrey level [5/ 8]).

Technical indicators allow the development of negative dynamics: Bollinger bands and Stochastic are directed downwards, while the MACD histogram is stable in the negative zone.

Resistance levels: 1.3305, 1.3427, 1.3488.

Support levels: 1.3183, 1.3122, 1.3061.

Trading tips

Short positions may be opened below 1.3183 with the target at 1.3122, 1.3061, and stop loss around 1.3225. Implementation period: 5–7 days.

Long positions may be opened above 1.3305 with the targets at 1.3427, 1.3488 and stop loss around 1.3260.