• USD/CAD gained some traction on Wednesday after Bank of Canada reduced its key policy rate to a three-year low of 2.5% on Wednesday.
• The Bank of Canada resumed its rate-cutting cycle after a nine-month pause, unanimously voting to lower the benchmark rate by 25 basis points to 2.5%, citing a soft labor market and reduced inflation concerns.
• The 25-basis-point cut was widely anticipated by markets. The central bank had paused its easing cycle in March after lowering rates by a cumulative 225 basis points over nine months, beginning in June of last year.
• The central bank had sharply lowered rates to 2.75% in March from 5% in June last year a total reduction of 225 basis points over nine months before holding steady amid uncertainty over U.S. tariffs.
• Attention now shifts to the Fed’s rate decision at 14:00 ET, with a quarter-point cut already priced in as investors look for signals on the path of future easing.
• Immediate resistance is located at 1.3813(SMA 20), any close above will push the pair towards 1.3883(50%fib).
• Support is seen at 1.3733(38.2%fib) and break below could take the pair towards 1.3691(Lower BB).
Recommendation: Good to sell around 1.3780, with stop loss of 1.3860 and target price of 1.3700
