FXStreet reports that Benjamin Wong, Strategist at DBS Bank, notes that USD/CAD’s decline has driven to a 1.2007 low, satiating a 50% Fibonacci marker at 1.2048. This allows a period of stabilisation and slight momentum loss before USD returns to its bearish trend that hugs a major 1.4690-1.4668 double top.

“The Bank of Canada (BoC) meets this Wednesday (9 June). This is a low key statement only policy meeting and hence, there are not a lot of expectations going into this meeting. Hence the next policy meeting on 14 July is what the market would look to and monitor closely.” 

“There have been bumps of late in economic data. However, the June jobs data (due 9 July) and the BoC 2Q business outlook survey (due 5 July) can easily allow the BoC to stage another taper decision (which would support further CAD strength) should they turn more supportive.”

“Bear also in mind that Canada has had a successful vaccination programme which saw two thirds of its population have at least a first vaccine jab. This does lend credence for the BoC to be a taper leader.”

“Loss of downward momentum would allow a counter mildly bullish USD trend to wade in. The dropped-down resistance line that begins from 1.4265 has dropped further to around 1.2405. Read that with the lower boundary of the Ichimoku daily chart at 1.2459; both are robust resistance levels to cross.”

“USD/CAD’s bearishness stems from a major 1.4690-1.4668 double top, which remains ongoing. In the current dip to a 1.2007 low, it has merely calibrated the price objective of the neckline erosion that began with a 1.3665 break. Naturally, the most recent decline has also satiated the 50% Fibonacci retracement of 0.9407-1.4690 (July 2011 lows to January 2016 peak) at 1.2048, leaving the fuller 61.8% Fibonacci retracement still open ended.”