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With the latest monetary policy statement coming from the Bank of Canada, we’re taking another look at the consolidation pattern in USD/CAD.

Another Look at USD/CAD Consolidation

USD/CAD 4-Hour Forex Chart
USD/CAD 4-Hour Forex Chart

Last week, I was checking out the consolidation on USD/CAD ahead of the the employment updates, but didn’t get the breakout I was looking for as both countries disappointed.

But this week may be different as the Bank of Canada will give their latest monetary policy decision tomorrow. And if they surprise the markets like they did at their last statement in April with hints of potential tapering, then it’s likely USD/CAD will get moving once again.

Expectations are for the BOC to hold off on any policy changes and likely to be more measured with their optimism given the recent economic misses (i.e., two months of disappointing jobs data).  But if they do hit us with more hints of tapering, especially by the end 2021, the Loonie could rally once again and push USD/CAD into a new leg lower.

And besides the BOC event, oil has been on an unstoppable move higher, with traders betting that we’ll see $100 a barrel by the end of next year. This could be supportive of CAD over the Greenback, and another reason to look at a potential short position in USD/CAD if the range breaks to the downside.

What do you guys think? Will the upcoming BOC statement finally move USD/CAD out of its range? 

Let me know in the comments below, and as always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.

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