For the USD/CAD currency pair, the Canadian has been one more beneficiary of the more dovish than expected FOMC minutes. In the last policy meeting, policymakers left the interest rates unchanged at 1.25% while investors expect another rate hike this year, following the latest Fed dot plot and committee’s comments. However, the minutes revealed that committee members see inflation rate to remain lower than Fed’s 2% target longer than expected and suggested to the central bank to be more patient before raising rates.
The Canadian dollar had an aggressive bullish day as it climbed higher versus the U.S. dollar. The commodity currency pair had its biggest sell-off day in one-month as it dropped more than 1% over yesterday’s trading day. The strong rebound on the 1.2755 resistance level, which stands slightly below the 50-day SMA, acted as an obstacle for the bullish traders. The next support that the pair is ready to hit is the 1.2575 barrier. If there is a break below the latter level will open the way for the 1.2415 handle.
However, there is an opposite scenario that we may see a rebound on 1.2575 and a continuation of the upward tendency. The RSI indicator entered the bearish territory and is sloping to the downside. The MACD oscillator is strengthening its bearish attitude and is developing below the zero line.