USD/CAD whipsawed on Wednesday following the Bank of Canada’s decision to leave rates unchanged. The dollar was slightly higher against most major currencies, but the weak Beige book report and the strong JOLTs report kept the markets volatile.

Technical Analysis

The USD/CAD rallied sharply but settled well off the session highs closing above support near the 10-day moving average at 1.2603. Additional support is seen near the 50-day moving average at 1.2559. Short-term momentum has turned positive. The fast stochastic generated a crossover buy signal in oversold territory. Medium-term negative momentum has decelerated as the MACD (moving average convergence divergence) index generated is poised to generated a crossover buy signal. This situation occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line).

The Bank of Canada left rates unchanged on Wednesday and said it expects growth to strengthen in the H2 following a contraction last quarter. The central bank kept its guidance that economic slack would be absorbed sometime in the second half of 2022, even with the surprise economic contraction in the second quarter and a softer start to the third quarter.

This article was originally posted on FX Empire

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