The US Dollar (USD) plunged sharply against the Canadian Dollar (CAD) on Wednesday, dragging the price of USDCAD to less than 1.3250 following the announcement of monetary policy from the Bank of Canada (BoC). The technical bias remains bearish because of a lower low in the ongoing downside wave.

Technical Analysis

As of this writing, the pair is being traded near 1.3246. A support may be seen around 1.3200, the psychological number as well as horizontal support area ahead of 1.3188, another critical horizontal support and then 1.3005, the swing low of the last major downside move as demonstrated in the given below chart.

On the upside, the pair is likely to face a hurdle near 1.3296, the intraday high of today ahead of 1.3400, the confluence of short term horizontal resistance as well psychological number and then 1.3588, the swing high of the last major upside rally.  The technical bias shall remain bearish as long as the 1.3588 resistance area is intact.

Bank of Canada (BoC) Monetary Policy

The Bank of Canada has decided to keep its benchmark interest rate where it is, citing a possible slowdown of the economy. While the economy gained steam through the last half of 2016, it predicts a slowdown ahead, which is why it has decided to keep its benchmark interest rate where it is for now. “Following a very weak first half of 2016, growth in the third quarter rebounded strongly, but more moderate growth is anticipated in the fourth quarter,” said the bank, which is led by Governor Stephen Poloz. The bank’s rate, known as the target for the overnight rate, is currently at 0.5 per cent.

Trade Idea

Considering the overall technical and fundamental outlook, selling the pair on short term rallies appears to be a good strategy.