The Bank of Canada is scheduled to announce a monetary policy decision today at 3:00 pm BST. Interest rates are set to remain unchanged but the Bank may take some action regarding asset purchases. Namely, it is expected that BoC will announce that the QE programme will enter reinvestment phase in November. There is also a feeling in the market that Canadian central bankers may decide to send a cautious, dovish message today as the gap between current employment levels continues to lag pre-pandemic levels. Nevertheless, recent data from the country suggested that growth may be accelerating. This combined with high commodity prices should provide support for CAD over medium-term.
Taking a look at USDCAD from a technical point of view, we can see that the pair has been trading in a downward trend since mid-September. The pair realized the range of a downside breakout from a head and shoulders pattern and a recovery move was launched later on. Nevertheless, the ongoing bounce should be treated as a correction in a downtrend unless buyers manage to push the pair above a few important resistance levels. The nearest such resistance is marked with the 100-period moving average (red line, H4 interval) while the next one can be found at the upper limit of the market geometry (blue box). A psychological 1.25 area can also provide some resistance.