Canadian dollar has been rallying since early May largely on expectations that the Bank of Canada (BoC) would hike rates this year. Some expect the BoC to give a strong hint of a rate hike this month. USD/CAD has dropped from 1.3793 to 1.29 levels over the two month period.
In my opinion, BoC’s hawkish turn has been priced-in at least for the short-term. The daily chart below shows the RSI is oversold. The trade data released today favors USD.
The short-term moving averages – 5DMA and 10-DMA are seriously overstretched. The daily RSI has breached the falling trend line as well…
I expect USD/CAD to revisit 1.30 and then consolidate around the psychological levels… that would help 10-DMA catch up with the sharp drop in the exchange rate.
Trade: Buy around @ 1.2925 Objective 1.30 Stops below 1.2890