Will USD/CAD Hit 1.33?

Will USD/CAD Hit 1.33?

Will USD/CAD Hit 1.33?

USD/CAD extended higher for the fourth consecutive trading day and even as the rallies grow shallower, the uptrend in the currency pair is strong. Fundamentally, oil is struggling to break $50 a barrel and appears prime for a correction. The Bank of Canada meets this week and between the big drop in retail sales and wildfires in Alberta, the central bank has more to worry about in May compared to April. The last time that we heard from the BoC, they left interest rates unchanged and upgraded their 2016 GDP forecasts. Although CAD traders shrugged off their positive assessment, this move reflected their optimism for the domestic economy. The main caveat this time around is the wildfires in Canada and how much it will impact Canadian GDP. Some economists believe that the impact is negligible but others think it could stall growth in Q2 especially with consumer spending contracting.

Technically, there’s no major resistance for USD/CAD until 1.33, the 50% Fibonacci retracement of the 2016 decline. However we would not be surprised if USD/CAD dipped back below 1.3100 and possibly even 1.3075 before making a run for new highs. The main support level for the pair is 1.3000.

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