The Bank of Canada (BoC) will announce its monetary policy decisions at 14:00 GMT. A hawkish BoC should help the loonie. Economists at Société Générale point out that for CAD bulls next support is 1.2230.

Surpassing the 200-DMA at 1.2500 is crucial for a short-term bounce  

“The BoC may announce the penultimate tapering step towards ending QE. Canadian money markets have also brought forward lift-off by the BoC to March 2022, adding an additional tailwind other than oil prices for the CAD. The guidance of the central bank is a first increase in 2H 2022. Bond purchases have been reduced already from CAD5 B to CAD2 B per week and a cut to CAD1 B today won’t be a surprise.”

“Daily MACD has dipped within negative territory which points towards continuation in pullback.”

“Next potential objectives are located at 1.2230 and projections of 1.2160/1.2115; this will be a crucial support.”

“Overcoming the 200-DMA at 1.2500 is essential for denoting a short-term rebound”.

See – BoC Preview: Forecasts from seven major banks, asset purchases to be cut