EUR/USD range bound while USD/CAD and AUD/CAD remain bearish post BoC rate hike
Outlook on EUR/USD, USD/CAD and AUD/CAD as BoC surprises market with a 25 basis-point rate hike to 4.75%.
EUR/USD continues to trade in a low volatility trading band
EUR/USD continues to trade in low volatility between its two-month low at $1.0636 and last Friday’s high at $1.0779 as investors look forward to next week’s rate decisions by the Federal Reserve (Fed) and European Central Bank (ECB).
Potential support below Tuesday’s $1.0668 low can be spotted along the March-to-June tentative uptrend line at $1.0648 whereas immediate resistance is seen along the two-month tentative downtrend line at $1.0724.
Failure at the next lower $1.0636 May low on a daily chart closing basis would push the January and March lows at $1.0516 to $1.0484 to the fore. Above the May-to-June downtrend line at $1.0724 lies Wednesday’s $1.0739 high.
USD/CAD nears multi-month low on surprise rate hike
USD/CAD continued its descent towards its C$1.3316 May low as the Bank of Canada (BoC) surprised market players by hiking its rates by 25 basis-points (bp) to 4.75%, a 22-year high.
The April and May lows at C$1.3316 to $1.3301 represent key support. With investors expecting to see another rate hike at the central bank’s next meeting in order to calm down an overheating economy and stubbornly high inflation, it may be eventually fallen through.
In this case the February trough at C$1.3263 would be in focus. Minor resistance sits at Friday’s low at C$1.3407.
AUD/CAD remains bearish despite BoC surprise rate hike
The AUD/USD exchange rate, which has been trading in a downward channel since the beginning of the year, rallied to a one-week high at C$0.8988 as the Reserve Bank of Australia (RBA) unexpectedly raised its cash rate by 25 bp to 4.10%.
The rally was nipped in the bud by the BoC following suit with its surprise 25 bp rate hike to 4.75% which pushed the cross lower again. With another 25 bp likely to be in the pipeline, the resumption of the downtrend looks probable with the May low at C$0.8786 being in sight, provided that Wednesday’s high at C$0.8988 isn’t bettered.
Minor resistance can be spotted between the mid- and late April lows at C$0.8944 to C$0.8952.
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