USD/CAD Plunges Following the Hawkish BoC Interest Rate Decision

Summary:

USD/CAD has plunged as investors digest the hawkish BoC interest rate decision. The pair will further react to US existing home sales and jobless claims.

USD/CAD has declined further as investors digest Wednesday’s BoC interest rate decision. As was expected, the bank retained interest rates at 0.25%. The rates have remained at that level since the beginning of the coronavirus pandemic in 2020. Besides, the central bank has decided to lower its weekly quantitative easing program by C$1 billion from C$4 billion. It has become the first central bank to taper its bond purchases.

Besides, Statistics Canada indicated that consumer prices increased by 0.5% in March. The figures are an indication of Canada’s steady recovery.

In today’s session, investors will be keen on how USD/CAD reacts to the US initial jobless claims. Analysts have forecasted a reading of 617,000, up from the previous 576,000. Besides, the existing home sales numbers are expected to come in at 6.19 million compared to February’s 6.22 million.

USDCAD Technical Outlook

BoC’s hawkish tone on Wednesday triggered a fall from the intraday high of 1.2655 to 1.2458. After recouping some of the losses, its back down to its current 1.2480.

On an hourly chart, it is trading below the 5 and 10-week exponential moving averages. Besides, it has moved past the bearish flag on the downside. The outlook for USD/CAD is rather bearish. The pair is likely to rise slightly higher to 1.2520 before moving further down. The subsequent levels to watch out for are 1.2450 and 1.2400.

On the flip side, better-than-expected US jobless claims and existing house sales data may push the support level higher to 1.2500. If that happens, the bulls will be targeting 1.2550 and the upper 1.2600.