Chart of the day - USDCAD (21.04.2021)

USDCAD brokke above a mid-term downward trendline yesterday in the afternoon. The pair continued to move higher until upward move was halted at the resistance zone ranging above 1.26 mark. Pair pulled back today and the near-term support to watch can be found in the 1.2555 swing area, which also coincides with the aforementioned downward trendline. In case of a break above 1.26 resistance, upward move may extend towards resistance at 1.2680.

USDCAD is likely to enjoy elevated volatility in the afternoon as the Canadian CPI data for March will be released at 1:30 pm BST and Bank of Canada will announce a rate decision at 3:00 pm BST. The latter is a much more important event as BoC is expected to start tightening policy. While rates are expected to be left unchanged, economists expect the central bank to scale down weekly government bond purchases from C$4 billion to C$3 billion. Expectations are reasoned with better-than-expected economic data from Canada. Apart from that, it is believed that the previous scale of central bank bond purchases is too big for the size of Canadian bond market. Bank of Canada Governor Tiff Macklem will hold a press conference at 4:00 pm BST.