USD/CAD: Inverse head and shoulders points to a potential move as high as 1.36 - Rabobank

Eren Sengezer FXStreet

"The Bank of Canada left the policy rate on hold at 1.75% today, Wednesday, March 6th 2019," note Rabobank analysts.

Key quotes

"As with January’s meeting, although the tone was notably more cautious than in 2018, the door was still left open for hikes as the Bank still hopes it can reach ‘neutral’ (2.50-3.50%)."

"At the end of last year we were calling for the Bank of Canada to squeeze in one more rate hike this cycle (in April) but we removed that following the change to our US projections - we no longer expect the Fed to raise rates and instead see them cutting rates in 2020 Q2. In the aftermath of today’s meeting we maintain the view that the next move from the BoC will be rate cuts in 2020 Q2."

"We expect USD/CAD to primarily trade in a 1.32-1.34 range but the recent formation of an inverse head and shoulders points to a potential move as high as 1.36. That is not our base case but the path of least resistance certainly points to a weaker CAD. That said, we expect rising oil prices and a seasonal bid from algos will put some pressure on USD/CAD in April."

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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