News & Analysis

USD/CAD failed to break resistance as BoC keeps rates on hold

7 September 2023 By Ryan Boyd


The USD/CAD pair experienced a relatively uneventful session after Bank of Canada (BoC) decided to
keep interest rates on hold. However, what caught the attention of traders was the hawkish tone in the
central bank’s language. Similar to many central banks globally, the BoC is cautious about raising rates
further until they thoroughly assess the inflation landscape. Still, they’ve left the door open for potential
rate hikes in the future.

Surprisingly, this hawkish stance from the BoC didn’t have a significant impact on the Canadian dollar
against the US. The strength of the US dollar remained dominant, keeping the USD/CAD pair relatively
flat during the session.

Currently, the pair finds itself at a crucial resistance level, which it has unsuccessfully attempted to
breach three times since April. The BoC’s hawkish language appears to have halted the pair’s upward
momentum, preventing a breakout, but wasn’t enough to push the pair south.

Since mid-July, the USD/CAD pair has experienced an impressive 4% surge, driven by a resilient US dollar
and the US Federal Reserve’s commitment to maintaining higher interest rates to combat inflation.
However, from the technical view, a slightly bearish divergence is forming on the daily RSI, indicating the
move might be running out of steam and a potential correction could be on the cards.
In this high inflation environment, the pair’s direction will likely hinge on crucial upcoming data releases
in the weeks ahead. In addition to the technical setups, traders should keep a close watch on the
fundamentals to help navigate potential shifts in direction.

Ready to start trading?

Disclaimer: Articles are from GO Markets analysts and contributors and are based on their independent analysis or personal experiences. Views, opinions or trading styles expressed are their own, and should not be taken as either representative of or shared by GO Markets. Advice, if any, is of a ‘general’ nature and not based on your personal objectives, financial situation or needs. Consider how appropriate the advice, if any, is to your objectives, financial situation and needs, before acting on the advice. If the advice relates to acquiring a particular financial product, you should obtain and consider the Product Disclosure Statement (PDS) and Financial Services Guide (FSG) for that product before making any decisions.