Today, at 5:00 pm (GMT +2), the Bank of Canada will publish the Overnight Rate, which represents short-term interest rates, and is pivotal to the overall pricing of the Canadian Dollar in the global markets. Let's look at how the markets are faring ahead of the BoC rates release.
Will EUR/CAD follow EUR/AUD?
2020-03-04 • Updated
The Bank of Canada will announce its interest rate decision at 17:00 MT time. According to the forecast, the regulator will lower the key interest rate from 1.75% to 1.25%.
On Tuesday, the Reserve Bank of Australia cut its key rate from 0.75% to 0.5%. The AUD, however, strengthened versus the EUR. If you look at the chart of EUR/AUD, you will see that the pair went down on the day of the meeting and the following day.
Just like EUR/AUD, EUR/CAD has soared during the period since February 20. There’s a chance that the pair will follow the path of EUR/AUD after the BOC meeting. Technically, EUR/CAD met resistance at 1.4945 (100-week MA). The return below the 2018 resistance line in the 1.4880 area will be a bearish sign. On the H4, there’s bearish divergence. The decline below 1.4860 will open the way down to 1.4830 (200-day MA) and 1.4770 (November high).
Trade idea for EUR/CAD
SELL 1.4860; TP1 1.4830; TP2 1.4770; SL 1.4875
Later today Tiff Macklem, the governor of the BoC (Bank of Canada) is expected to speak at the Riksbank's International Symposium as part of a discussion panel on 'Central Bank Independence'.
The trend in the scenario above is clearly bearish. We have also had a recent break of structure at the marked horizontal arrows, which means we can expect price to react from the supply zone that broke the structure.
The first FOMC meeting comes after a buildup of anticipation from traders and investors alike, as the markets await what posture the Fed will take regarding the interest rates; would there be a hike or a cut in interest rates?
Western countries are trying to find other options for oil and gas supplies after a 10th package of sanctions, which will put more pressure on Russian oil and decrease global oil supply. Italy, for example, is in talks with Libya.
Last year was tough for the Japanese yen. USDJPY gained more than 30% over 2022, striking above 150 in October. While anticipation of slower Fed rate hikes pulled the pair below the 130 level at the start of 2023, the speculations over the destiny of BOJ’s yield control policy grabbed the attention of the Japanese assets in the middle of January. What lies ahead for traders of the Japanese yen?