Price held 200 day MA earlier in the week. Sits between the 100 and 200 hour MAs today.

On Monday was the USDCAD's first look below the 200 day MA since September 2014. That was a long time ago. The pair closed that day pretty much on the MA line.

Yesterday, there is a move back higher and above the key line. Traders had to put some room between the MA and the price before the Bank of Canada statement at 10 AM today. Plus let's face it, you are simply supposed to hold the 200 day MA, if tested for the first time since September 2014 and it is March 2016. It is just what it is suppose to happen.

Admittedly, it didn't make it easier when it went 25 pips below that key MA, but when the price moved back above - and oil fell yesterday - it was more comforting for the buyers to cover a little before the decision in trading yesterday.

Speaking of oil, since about Feb 10th when the price of oil bottomed at $26, the relationship with CAD and oil has been more "normal". Oil went up, the price of CAD went up. Yesterday oil is down and the USDCAD is up (CAD down). So they seem to be more in sync although you cannot count on it. Today's statement - although not expected to surprise - always has a potential to take charge and supersede that relationship at least temporarily.

So what about technically? As mentioned, the price has centered itself in trading between the 100 hour MA (blue line in the chart below at 1.33732 and the 200 hour MA at 1.33304). The high price came in at 1.3435 but could not gather any more momentum on the move above. That failure helped to kick-start the move back to the downside today.

The low today made it to 1.3377 - just above the 100 hour MA line. The broken trend line was also tested below (see chart above)..

The pair has positioned itself above and below MA lines. A perfect place to be technically so that traders can go with a break and hope it sticks of course.

Other levels on the topside:

  • 1.3430 - 200 hour MA (green line in the chart above)
  • 1.3488 = 38.2% of the move down from Feb 24 high.
  • 1.3559 - 50% of the same move
  • 1.3583/1.3586 - 100 bar MA on the 4-hour chart and high from Feb 26
  • 1.3663 - 100 day MA

On the downside:

  • 1.3373 - Move back below 100 hour MA. .
  • 1.32915 - The market will then start to re-eye the 200 day MA for Test II. A break opens the flood gates to the downside. The lower trend line on the hourly chart above will be a target (we will see where it lines up tomorrow)
  • 1.3224-46 - A collection of lows going back to November. The lower channel trend line extends to this area as welll

Get the statement.

Interpret it as to dovish/hawkish.

If it is a surprise expect a break the earlier technical levels. If it is as expected sit tight.

If it is a surprise and you get a break but it fails, watch out. The USDCAD can still whip around. You don't want to be involved.

Good luck.