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Canadian Dollar Rallies After Fed Decision, BoC Minutes Offer Little Surprise

The Canadian Dollar (CAD) experienced volatility following the Federal Reserve’s (Fed) decision to hold interest rates at 5.5%, as expected. Despite hawkish signals from the Fed Chair, investors maintained a risk-on sentiment.

Key Factors:

  • Fed Decision Impact: Though the Fed’s move was anticipated, investors reacted bullishly to the outlook for interest rates.
  • BoC Minutes: The Bank of Canada’s meeting minutes offered few surprises, confirming the easing of inflationary pressure but not clearly signaling a potential rate cut.
  • CAD Recovery: The CAD recovered against the USD after initial volatility, climbing nearly two-thirds of a percent.

Technical Outlook:

  • USD/CAD Decline: The pair fell below the 1.3500 handle, with near-term support near 1.3460 (last week’s low).
  • Key SMA: The USD/CAD remains near the 200-day SMA (1.3480) with continued low momentum.
  • Consolidation: Despite a rising higher lows pattern, the pair remains in a medium-term trading range between 1.3200 and 1.3900.