The US dollar has fallen to its lowest trading level since November 19th against the Canadian dollar, as rising oil prices help to boost the Canadian currency on the foreign exchange market.
Aside from the strength in oil prices boosting the Canadian dollar, the US dollar index had a terrible Tuesday, as the greenback sold-off broadly against commodity-related currencies and the euro.
Yesterday’s Bank of Canada meeting took a backseat in the events driving the Canadian dollar. Traders were largely not expected the Canadian central bank to hike amidst Omicron fears.
The Bank of Canada kept borrowing costs unchanged but highlighted the overall strength in the domestic labour market. The central bank also expressed worries about the persistence of inflation that will likely keep expectations of imminent interest rate hikes intact.
In a statement-only decision Wednesday, policy makers kept the benchmark overnight rate unchanged at 0.25% and reiterated the economy continues to require considerable monetary policy support.
Something to note is the USDCAD pair could still be headed lower due to huge amounts of bearish MACD price divergence and the daily chart also shows a bearish triple top price pattern.
High levels of bullish sentiment are still seen towards the USDCAD pair right now, with some 73 percent of traders holding a bullish view towards the USDCAD pair.
This bullish sentiment is a worry for USDCAD long traders, as retail traders have poor market timing meaning that a wider downside correction is certainly possible over the coming days.
USDCAD Short-Term Technical Analysis
The four-hour time frame currently shows that a large rising wedge pattern is present and appears to be playing out to the downside. Rising wedge are amongst the most bearish reversal patterns.
With the USDCAD pair falling a further drop below the 1.2600 level could cause a major price drop with the 1.2300 level the primary bearish target for the mentioned reversal pattern.
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USDCAD Medium-Term Technical Analysis
A bearish triple-top has now formed over the USDCAD pair across the daily time frame, with the recent upside failure above the 1.2860 resistance level last week.
Bearish MACD price divergence is also seen, with a massive slump back down towards the 1.2400 level need in order for the MACD price divergence to be reversed on the four-hour time frame.
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