The USD/CAD currency pair on Wednesday bounced off the current weekly lows of about 1.2057 to 1.2110 after the BoC kept interest rates unchanged. The dollar continues to trade in a sideways channel formation to the loonie. 

The currency pair rejected an invitation to drop to oversold levels of the 14-hour RSI after bouncing back to the normal trading zone. The currency pair is now trading just above the 100-hour moving average.

USD/CAD Fundamentals Overview

From a fundamental perspective, the USD/CAD currency pair is trading at the back of a relatively busy period in both markets. On Wednesday, the bank of Canada decided to keep the base interest rate unchanged at 0.25%. There were no indications that the bank would consider hiking rates any time soon. On Tuesday, Canada’s International Merchandise Trade for April beat the expectation of C$-0.8 billion with C$0.59 billion up from the previous figure of C$-1.35 billion.

In the US, Goods and Services Trade Balance for April come in better than expected at $-68.5 billion versus $-69 billion up from $-75 billion reported in the previous period. Traders will be looking forward to Thursday’s consumer price index data and the initial jobless claims. The G& meeting later in the week will also provide traders with more guidance on the strategies to use.

USD/CAD Technical Analysis (the 60-min Chart)

Technically, the USD/CAD currency pair appears to be trading within a sideways channel formation in the 60-min chart. The currency pair recently bounced back to avoid slipping to the oversold levels of the 14-hour RSI. 

The bulls will be targeting short-term profits at around 1.2151 or higher at 1.2204. On the other hand, the bears will target potential pullback profits at around 1.2057 or lower at 1.2010.

USD/CAD Technical Analysis (the Daily Chart)

In the daily chart, the USD/CAD currency pair appears to be trading within a sharply descending channel formation. This indicates a strong long-term bearish bias in the market sentiment. The pair is now recovering after plunging to oversold levels of the 14-day RSI last month.

The bulls will be looking to push the current recovery momentum towards 1.2276 or higher to 1.2496. On the other hand, the bulls will look to ride the current bearish trend towards 1.1904 or lower to 1.1711.