USD/CAD Price Analysis: Loonie grinds within bearish channel, 1.3450 and BoC in focus

• USD/CAD licks its wounds at monthly low within one-week-old descending trend channel.
• BoC is expected to keep the interest rates unchanged, policy signals will be the key to follow for Loonie traders.
• Steady RSI suggests slower grind towards the south, convergence of 100-HMA, channel’s top line prods bulls.
• Three-week-long horizontal area and dovish BoC outlook holds the key for USD/CAD bull’s conviction.

USD/CAD aptly portrays the Loonie trader’s cautious mood ahead of the Bank of Canada (BoC) Interest Rate Decision as it pares recent losses around a multi-day low heading into Wednesday’s European session. That said, the quote stays defensive near the lowest level in a month despite recently picking up bids to 1.3405.

Also read: USD/CAD braces for BoC near 1.3400 as Oil grinds higher, US Dollar struggles

Apart from the pre-BoC consolidation, the existence of a one-week-long bearish channel also keeps the USD/CAD bears hopeful.

That said, the steady RSI (14) line allows the USD/CAD pair to grind higher within a one-week-old bearish trend channel, currently between 1.3380 and 1.3445-50.

It’s worth noting that the 100-bar Hourly Moving Average (HMA) adds strength to the 1.3445-50 upside hurdle for the pair, a break of which could direct the pair buyers towards a convergence of the 200-HMA and 38.2% Fibonacci retracement level of the pair’s May 08-25 upside, near 1.3530.

Should the Loonie pair manages to remain firmer past 1.3530, backed by the dovish BoC outcome, a horizontal area comprising multiple levels marked since mid-April, near 1.3570, acts as the last defense of the USD/CAD bears.

On the contrary, a downside break of the stated channel’s bottom line, close to 1.3380 at the latest, won’t hesitate to challenge the previous monthly high of near 1.3315, a break of which could drag the Loonie pair price towards the yearly low marked in February around 1.3265.

USD/CAD: Hourly chart

Trend: Bearish