In June, the Canadian dollar strengthened above $1.32 per dollar, reaching its highest level in four months, under the influence of the hawkish position of the Bank of Canada. At its last meeting, the central bank unexpectedly raised its key interest rate by 25 basis points. The decision marked the resumption of the Bank of Canada’s monetary tightening cycle after two previous delays and is contrary to the Board of Governors’ forecast of a rate peak. Economists predict that at the July meeting the central bank will continue to raise interest rates, stepping up efforts to curb stubbornly high interest rates. However, further gains in the Canadian dollar were capped by the Fed’s hawkish outlook at its June meeting despite interest rate holding.
Currency pair Canadian Dollar to US Dollar USD/CAD completes the trading week near the level of 1.3226.
USD/CAD Weekly Forecast June 19 — 23, 2023
The pair continues to move as part of a strong fall and a bullish channel. Moving averages indicate a bullish trend. Prices have broken through the area between the signal lines down, which indicates pressure from sellers of the currency pair and a potential continuation of the fall in the near future. At the moment, we should expect an attempt to develop a slight correction and a test of the support level near the area of 1.3075. Then, a rebound upwards and the continuation of the rise in quotes with a target above the level of 1.3895.
An additional signal in favor of the rise of the USD/CAD currency pair will be a test of the rising trend line on the relative strength index (RSI). The second signal will be a rebound from the lower border of the bullish channel. Cancellation of the option to raise the quotes of the USD/CAD currency pair in the current trading week June 19 — 23, 2023 will be a fall and a breakdown of the area of 1.2865. This will indicate a breakdown of support and a continuation of the fall to the area below the level of 1.2645. The rise in the pair will be confirmed by the breakdown of the resistance area and the closing of the price above the level of 1.3565, which will indicate the breakdown of the upper border of the downward correction channel.
Among the important news from Canada that may have an impact on the Canadian Dollar, it is worth highlighting: Canada Retail Sales m/m, Canada Core Retail Sales m/m.
USD/CAD Weekly Forecast June 19 — 23, 2023 suggests an attempt to develop a downward correction and test the support area near the level of 1.3075. Further, continued growth with the target above the level of 1.3895. An additional signal in favor of the rise will be a test of the long-term bullish trend line on the relative strength index (RSI). Cancellation of the growth development option will be a fall and a breakdown of the area of 1.2865. This will indicate a breakdown of important support and a continued decline in the rise with a target below 1.2645.
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